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Anatomy of Fintech Law

The Guidelines on Operations of Electronic Payment Channels in Nigeria governs POS card acceptance services.

The CBN (Central Bank of Nigeria) issued the Guidelines on Operation of Electronic Payment Channels in Nigeria 2020 (the “Guidelines on Operation of Electronic Payment Channels”) under the CBN Act 2007, which enables the CBN to promote and facilitate the development of efficient and effective systems for the settlement of transactions.

Under the CBN Act 2007, such powers include developing electronic payment systems to regulate POS (Point-of-Sale) terminal identification, configuration, certification, and deployment in Nigeria.

Indeed, the Guidelines on Operation of Electronic Payment Channels replaced the 2016 Guidelines on Operation of Electronic Payment Channels in Nigeria.

Nigeria’s earliest regulatory framework for POS card acceptance services was the Guidelines on Point of Sale (POS) Card Acceptance Services 2011.

Which the 2016 Guidelines on Operation of Electronic Payment Channels expressly superseded. The 2011 and 2016 Guidelines are not part of Nigeria’s legal regime for POS operations.

We observe that the CBN’s Guidelines on Operation of Electronic Payment Channels lack critical accessibility features for people living with disabilities and elderly digital financial consumers in Nigeria.

As envisaged under the Discrimination Against Persons with Disabilities Act 2018 and other international standards. ATM (automated teller machine) locations are public sites under the Discrimination Against Persons with Disabilities Act.

ATM locations should have ramps, handrails, ramp rails, hearing aids, clear floor space for wheelchairs, braille functions, voice commands, good lighting, assistive technologies, sun shields and shelter for people with albinism, and tactile graphics.

The United States’s Americans with Disabilities Act (ADA) is the equivalent of Nigeria’s Discrimination Against Persons with Disabilities Act 2018.

Under the ADA, the United States Department of Justice sets the minimum requirements for ATM accessibility in the United States payment industry.

Stakeholders in POS Card Acceptance Services

POS Card Acceptance Services stakeholders include:

  1. Merchant Acquirers
  2. Card Issuers
  3. Merchants
  4. Cardholders
  5. Card Schemes
  6. Switches
  7. Payments Terminal Service Aggregator (PTSA)
  8. Payments Terminal Service Providers (PTSP)

Minimum Standards for POS Card Services

Stakeholders who process or store cardholders’ information must ensure that the POS terminals, applications, and processing systems comply with the following:

  1. Various card schemes rules
  2. PA DSS (Payment Application Data Security Standard).
  3. PCI PED (Payment Card Industry PIN Entry Device).
  4. PCI DSS (Payment Card Industry Data Security Standard).
  5. Triple DES (Triple Data Encryption Standards)
  6. EMV (Euromoney Mastercard and Visa)

POS Stakeholders Roles and Responsibilities

Merchant Acquirers must be CBN-licenced entities. They can own POS terminals, but only the CBN-licenced Payment Terminal Services Provider (PTSP) deploys and supports the Merchant Acquirer’s POS terminals. There are no exclusivity relationships in the POS card acceptance services.

A PTSP deploy, maintain, and provide POS terminal support services in Nigeria and ensure the effectiveness of POS operations.

PTSP services to the acquirers include POS terminal management and support, purchase and replacement of spare parts, connectivity, training, repairs, and development of value-added services.

POS Terminal owners include Banks, Merchants, and Acquirers – PTSPs are permitted to own POS Terminal in Nigeria. POS Terminal owners bear the repairs and component replacement costs.

Nigeria Interbank Settlement Systems (NIBSS), a CBN and Nigerian bank-owned entity, is the financial system’s sole Payments Terminal Service Aggregator (PTSA).

NIBSS establishes and manages all communication networks for POS data traffic that comply with the payment industry service uptime and availability standards. The CBN requires operators in Nigeria’s payment system to ensure 99.99% and 90% uptime and service availability.

PTSA certifies and approves POS Terminals that meet the POS Terminal standards. PTSA should participate on a joint committee of industry stakeholders to negotiate a price list with two or three terminal equipment providers to bulk purchase POS terminals for the Nigerian market.

The POS terminal price list ensures a bulk purchase agreement that will reduce the cost of POS terminals, define special requirements for the Nigerian market, and provide sufficient support infrastructure.

All POS terminals operating in Nigeria must connect to the PTSA’s Terminal Management System. The PTSA routes all transactions from POS terminals to the Acquirer or its designated Third-Party Processor (TPP).

Enabling Acquirers who are Issuers handle On-Us transactions appropriately, and all Acquirers manage their risks and accept responsibility for such transactions in line with Charge-back Rules of relevant Card Schemes.

A merchant shall agree with the Merchant Acquirer, clearly specifying each party’s obligations. Merchants must not charge different fees, surcharge cardholders, or discriminate against any digital financial consumer who desires a card-based transaction.

A digital financial consumer or cardholder is responsible for protecting the card’s sensitive details and avoiding unauthorized disclosures, including the PAN (payment account number) or the (long) card number.

Without delay, the cardholder must inform the issuer about missing, stolen, damaged, lost, or destroyed cards. Of course, the cardholder may withdraw from the contract for a payment card without prior notice to the issuer, provided the cardholder does not owe any charges or transactions on the payment card.

A bank or the card issuer must resolve cardholders’ complaints within 48 hours. Banks must give a cardholder reasonable notice before changing the card’s terms and conditions.

The Guidelines on Operation of Electronic Payment and all CBN’s relevant regulations bind card schemes in Nigeria.

The CBN penalizes the Card Scheme that wrongfully denies membership or unnecessarily delays the certification process for potential players. Such penalties include fines equal to the expected revenue of the payment services provider for that period, suspension, or license revocation.

Card Schemes or entities with a card management contract with a Card scheme must not engage in the business of an acquirer. Antitrust activity or acts likely to abuse dominant position, monopoly, or unfair competition, and all forms of arrangement or collusion between two or more Card Schemes or Payment Schemes concerning Issuing, Acquiring, Processing, or Switching are prohibited.

Switches in Nigeria must switch all Nigerian bank-issued cards between Acquirers and Issuers. To achieve the interconnectivity of all new and existing switching companies, they open their networks for a reciprocal exchange of transaction data with Nigeria Central Switch and PTSA.

Settlement Mechanism

Domestic POS transactions enjoy a T+1 settlement basis. T is the transaction, and +1 means plus one day. Failure to execute the T+1 settlement cycle results in a sanction to the NIBSS as the operator of the NCS (national central switch).

Card schemes or their appointed switches must supply NIBSS with settlement reports for the preceding day’s transaction on or before 10:00 a.m. daily.

NIBSS directly credits other parties’ accounts with their share of the Interchange. At the same time, the banks pay NIBSS for the settlement done to the merchant account under the NEFT (National Electronic Fund Transfer) fee transaction charges.


Every stakeholder must comply with the Guidelines on Operation of Electronic Payment and other relevant CBN-issued regulations.

As the exclusive sector-specific regulator of the financial services market, the CBN sanctions noncompliance with the Guidelines on the Operation of Electronic Payment.

National Commission for Persons with Disabilities, the Association of Persons with Disabilities, and other interest groups must ensure that CBN revises the ATM card acceptance framework to include accessibility aids for people with disabilities.

Nigeria’s ATM’s accessibility criteria must be the minimum requirement under the ADA.

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