The Nigeria Interbank Settlement Plc (NIBSS), has directed Nigerian banks to take off all non-deposit taking financial institutions from their NIP fund transfer channels.
The circular released by NIBSS says, “listing non-deposit taking financial institutions such as switching companies (switches). Payment Solution Service Providers (PSSP), and Super Agents (SA) as beneficiary institutions on your NIP funds transfer channels contravenes the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria dated February 2014.”
The circular stated that these financial institutions are to be stopped from receiving inflows, but they are still allowed to process outflows as inflows to banks.
“For clarity, Switches, PSSPs, and SAs may process outward transfers as inflows to Banks but are not to receive inflows as their licenses do not permit to hold customers’ funds.”
The non-deposit-taking financial institutions include switching companies, payment solution service providers, and super agents. The NIP fund transfer channels include USSD, POS, mobile banking apps, web and internet platforms, and ATMs.
The implementation of this policy will take Fintechs such as Opay, Palmpay, Paga other payment service providers out of business as they wouldn’t be able to receive inflow funds to process outflow transfers unless they acquire banking licenses from CBN to be permitted to receive and hold funds.
Other Fintechs like Moniepoint, which registered and got approval as microfinance banks will not be affected by this policy.
This policy would also have negative impact on small businesses that use these Fintech platforms to receive payments.
These Fintechs are therefore expected to expedite action in obtaining banking licenses to prevent their collapse.