CBN Publishes Regulation for the Operation of Indirect Participants in the Payments System

In exercise of the powers conferred on the Central Bank of Nigeria (CBN) under the CBN Act 2007 to promote a sound financial system in Nigeria, the CBN published Regulations for the Operation of Indirect Participants in the Payments System (the Regulation) on October 10, 2019. The objectives of the Regulation are to:

(i) set out the procedures for effective integration of indirect participants (defined hereunder) in the payments system in Nigeria;

(ii) standardise the operation of indirect participants in the payments system, taking into cognisance their operational risks;

(iii) provide a mechanism and framework for the clearing and settlement of indirect participants payment instruments through the direct participating banks; and

(iv) strengthen indirect participants for effective contribution to digital financial services in Nigeria.

An indirect participant is defined as “a licensed deposit-taking institution which is a non-clearing financial institution but settles its payments obligations through a direct participating bank“.

Indirect participants include Microfinance Banks, Payment Service Banks, Super Agents, and Mobile Money Operators. Relatedly, a direct participating bank is a direct participant who performs settlement functions to an indirect participant.

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