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Central Bank of Nigeria

Payments System

Introduction | Retails Payments | Modes | Large Value Payments | PSV2020 | PSV2025 | Oversight | Payments Service Providers | BVN | Circulars | Guidelines | e-Payment Statistics | International Money Transfer Operators


The payments system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other. It, therefore, represents the major foundation of the modern market economy. Essentially, there are three pivotal roles for the payments system, namely: the Monetary Policy role, the financial stability role and the overall economic role.

The Nigerian Payments System witnessed remarkable achievements in the recent past, with the introduction of a number of initiatives under the Payments System Vision 2020 as listed below, amongst others:

1.1 National Payments System (NPS) Objectives

Given the important role that well-functioning payment systems have on monetary policy, financial stability and overall economic activity, the Central Bank of Nigeria has put in place a set of national payments system policy objectives as a broad guideline and framework for all payments system initiatives. In setting out the objectives of the National Payments System (NPS), the goal is to ensure that the system is available without interruption, meet as far as possible all users' needs, and operate at minimum risk and reasonable cost.

1.2 General Legal Framework

The CBN has drafted a Payments System Management Bill to address the absence of law that explicitly and exclusively deals with Payments systems in Nigeria. The CBN Act, as amended in 2007 gives the Bank the implicit powers to oversee and regulate the payments system. Section 47 (1) of the CBN Act provides that "it shall be the duty of the CBN to facilitate the clearing of cheques and credit instruments for banks carrying on business in Nigeria and for this purpose, the bank shall at any appropriate time and in conjunction with other banks establish clearing houses in premises provided by the Bank in such places as the Bank may consider necessary". Section 47 (2) provides that the Bank shall continue to promote and facilitate the development of efficient and effective systems for the settlement of transactions Section 17 provides that "the Bank shall have the sole right of issuing currency notes and coins throughout Nigeria--". Also, the Nigeria Deposit Insurance Corporation (NDIC) in exercising its responsibilities as provided by NDIC Act, 2006 complements the supervisory function of the CBN in the nation's payment system. The extent of this responsibility is the insuring of all deposit liabilities of banks in order to protect depositors against bank failure and instill public confidence in the system.

1.3 Institutional and Organizational Framework

The CBN is the main institution that regulates the Payments System. Banks, discount houses, Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Stock Exchange, payment service providers and switching companies, remain the key players in the Nigerian payments system. The CBN, complemented by the Nigeria Deposit Insurance Corporation (NDIC) provides the necessary oversight function to ensure the efficiency and effectiveness of the payments system.

1.4 The role of Central Bank in the National Payment System

There are six major responsibilities of the Bank that are derived from the Act establishing the CBN, as amended. They include:

  1. Act as Banker to banks and provide the smooth operation of payments, clearing and settlement systems.
  2. Act as Banker and adviser to, and as fiscal agent of Government.
  3. Issue currency notes and coins
  4. License and supervi se authorized dealers (except stock brokers that are licensed by Securities and Exchange Commission and supervised by the Nigeria Stock Exchange).
  5. Formulate and implement foreign exchange reserves.
  6. Hold and manage its foreign exchange reserves.

Furthermore, the Bank is empowered by the CBN Act to formulate and implement monetary policy, to achieve and maintain stability in the general level of prices and make regulations for the proper functioning of a stable market. It is also charged with the responsibility to oversee the operations of deposit money banks and other financial institutions.

Implementation of MICR - 1993
Establishment of NIBSS - 1994
Setting up of Technical Committee on Automation and appointment of consultant for NACS -1996-1997
Full implementation and live operation of NACS - 2002
Reduction of the clearing cycle to T+3 and T+5 for local and upcountry instruments, respectively - 2002
Guidelines on e-banking - 2003
Establishment of switching companies and interoperability of /shared ATM/POS - 2004
New Settlement Framework (for Cheque Clearing)- 2004
Cheque Standard and Cheque Printer accreditation Scheme - 2005
Reconstituted National Payments System Committee and set up technical sub-committee - 2005
Implementation of RTGS System, T 24 eFASS and ERP - 2006
Payments System Strategy Team inaugurated- 2006
Establishment of National Central Switch 2006
Cheque Standard & Cheque Printers Accreditation - 2006
Payments System Vision 2020 - 2007
Harmonization of clearing cycles (upcountry and local) at T+2 (Three working days) 2008
Deployment of NACS to Port Harcourt Clearing Zone 2008
Deployment of NACS to Kano, Ibadan and Enugu 2009
Issuance of Mobile Payment Regulatory Framework 2009
Guidelines on Transaction Switching 2009
Guidelines on Stored Value/Prepaid Cards 2009
Direct Debit Rules 2009
Cheque cap of N10 million 2010
Migration to EMV Cards 2010
Guidelines on ATM Operations 2010
Nigeria Uniform Bank Account Number (NUBAN) 2010
Issuance of cash-less policy circular 2011
Issuance of Guidelines for card issuance and usage in Nigeria 2011
License of 6 PTSPs for deployment and maintenance of POS 2011
Commencement of charges on cash withdrawal/deposit above the cash-less policy threshold in Lagos 2012
Implementation of cheque truncation in Lagos 2012
Reduction of clearing cycle from T+2 to T+1 in Lagos 2012
Nationwide implementation of Cheque Truncation 2013
Reduction of clearing cycle to T+1 from T+2 2013
Setting of N150,000 limit on encashment of 3rd party cheques 2013
Licensed 10 additional PTSPs 2013
Issuance of Clearing House sanctions to instill discipline among the participating members 2013
Deployment of new RTGS and Scripless Securities Settlement System 2013
Compliance monitoring with Payment Card Industry Data and Security Standards (PCIDSS) 2013
Issuance of Guidelines for the regulation of Agent Banking in Nigeria 2013
Issuance of revised Guidelines for card issuance and usage in Nigeria 2014
Implementation of industry e-reference portal 2014
Abolished fees on cash deposit above the Cash-Less Policy threshold 2014
Sensitization Campaign On Cash-Less Policy in preparation of take-off of the cash-less initiative in the remaining 30 states of the Federation 2014
Implementation of Bank Verification Number (BVN) Scheme 2014
Issuance of Guidelines on International Money Transfer services in Nigeria 2014

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