CBN INTRODUCES NEW MARKET STRUCTURE, DATA LOCALISATION AND OWNERSHIP DISCLOSURE REQUIREMENTS FOR THE NIGERIAN PAYMENTS ECOSYSTEM
Introduction
The Central Bank of Nigeria (CBN), on 15 June 2026, issued a Circular titled “Introduction of Market Structure Requirements, Data Localisation, Ultimate Beneficial Ownership Disclosure, and Systemic Oversight Measures in the Nigeria Payments System“ (the Circular), introducing significant regulatory reforms aimed at strengthening transparency, competition, and systemic oversight within Nigeria’s payments ecosystem. The Circular applies to Deposit Money Banks (DMBs), Payment Service Providers (PSPs), and other financial institutions with digital payment operations.
To address the concerns relating to market concentration, systemic risk, operational dependence on a limited number of market participants and the storage of payment transaction data outside Nigeria, the Circular introduces the regulatory measures discussed below.
Mandatory Ultimate Beneficial Ownership (UBO) Disclosure
The Circular requires all DMBs, PSPs and other financial institutions with digital payment footprints to disclose the Ultimate Beneficial Ownership (UBO) of significant shareholders in accordance with applicable laws and regulations, including Nigeria’s Anti-Money Laundering, Combating the Financing of Terrorism and Counter-Proliferation Financing (AML/CFT/CPF) framework. Hence, institutions are further required to maintain accurate and up-to-date UBO records; and make such records available to the CBN upon request.
Although UBO disclosure requirements already exist under CBN’s 2022 AML/CFT/CPF framework, this Circular reiterates CBN’s policy objective of promoting transparency and reducing systemic financial risk.
Mandatory Localisation of Payment Transaction Data
The Circular introduces a data localisation requirement for payment transaction data generated within Nigeria. Accordingly, all financial institutions and participants facilitating payments in Nigeria must ensure that payment transaction data generated within Nigeria is stored and managed within Nigeria in compliance with applicable Nigerian data protection laws and regulations.
The CBN has provided a transition period from now till full compliance becoming mandatory from 1 January 2027. This represents one of the most significant operational changes introduced by the Circular. Several payment service providers currently utilise foreign cloud infrastructure or maintain transaction data across multiple jurisdictions. The new requirement may therefore necessitate substantial changes to technology infrastructure, data hosting arrangements, outsourcing agreements and cloud service contracts.
New Market Structure Requirements
The introduction of structural market share limits marks a significant evolution in the regulation of Nigeria’s payments industry. The Circular provides that a licensed financial institution (whether alone or as part of a group of related entities) holding more than 25% market share in consumer issuing during any rolling twelve-month period must not hold more than 15% market share in merchant acquiring during the same period. Conversely, an institution holding more than 25% market share in merchant acquiring must not hold more than 15% market share in consumer issuing. The Circular further requires all regulated entities to submit monthly market share returns in accordance with CBN-prescribed templates and timelines.
This innovation is pertinent as the Circular introduces competition-oriented regulatory measures aimed at reducing concentration risk and limiting the ability of a single institution or group to dominate multiple critical segments of the payments value chain. More still, the inclusion of “group of related entities” also suggests that the CBN intends to look beyond individual licensed entities when assessing market concentration. This ideally limits the effectiveness of group-level restructuring designed solely to circumvent the prescribed thresholds. Affected institutions are required to achieve full compliance by 31 December 2026.
Call to Action
Further to the foregoing changes introduced by the Circular, banks and other financial institutions should consider:
- reviewing beneficial ownership records and governance documentation to ensure compliance with UBO disclosure obligations;
- assessing existing data hosting arrangements and developing migration strategies where payment data is currently stored outside Nigeria;
- evaluating market share positions across consumer issuing and merchant acquiring activities;
- reviewing group structures to determine whether related entities may collectively exceed the prescribed thresholds; and
- strengthening internal compliance and regulatory reporting processes in anticipation of the new monthly reporting obligations.
Conclusion
The Circular represents a significant development in the regulation of Nigeria’s payments ecosystem. Financial institutions should therefore commence comprehensive compliance assessments and implementation programmes to ensure timely alignment with the new regulatory requirements.