Opay, FairMoney, Palmpay, others not affected by the NIBSS circular  

Fintech companies such as Opay, FairMoney, and Palmpay are licensed to receive deposits and, as such, are not impacted by the Nigeria Inter-Bank Settlement System (NIBSS) circular issued on December 5, 2023.

This directive, titled ‘Directive to Disconnect Switches, Payment Solution Service Providers (PSSPs) and Super Agents from NIBSS Instant Payment (NIP) Outwards System,’ does not apply to them.

An earlier report published by Nairametrics on Thursday, December 7th, had mistakenly included the names of these FinTechs. However, the story has since been updated and a corrigendum was issued accordingly.

Similarly, Paga Tech, Abeg Technologies, and Kuda Bank are not affected by the NIBSS directive, as they are also appropriately licensed.

NIBSS Circular

The circular specifies that the directive applies only to financial institutions that are not licensed to receive deposits from their customers – categorized as Non-Deposit Financial Institutions.

These institutions are barred from receiving funds from customers due to their lack of authorization to hold such funds.

• This directive explicitly states that only institutions licensed by the Central Bank of Nigeria (CBN) to hold depositors’ funds will be recognized as beneficiary institutions on banks’ instant payment platforms.
• In compliance with this directive, only deposit institutions that possess the necessary CBN licenses will continue to be eligible to be listed as beneficiaries on the instant payment platforms.
• Financial institutions that hold banking licenses, including those for commercial, microfinance, and merchant banking, as well as other financial service providers with mobile money operator licenses or payment service banking licenses, are authorized to receive deposits from customers.
• Consequently, they are eligible to be listed as beneficiaries on instant payment platforms.

Further clarification from the Central Bank of Nigeria (CBN) website reveals that “Licensed Payments Services Providers” which include non-deposit-taking institutions such as Switches, Super Agents, and Payment Solution Service Providers (PSSPs), are permitted to use NIBSS NIP services for outward transfers.

• However, it’s important to note that these entities do not accept customer deposits.
• Additionally, the Nigeria Deposit Insurance Corporation (NDIC) website provides a list of approved mobile money operators, Fintechs with a microfinance bank license, and payment service bank licenses.

These entities are exempt from the NIBSS directive as they are licensed deposit financial institutions in Nigeria.”

What you should know

The first quarter of 2023 saw Nigeria grappling with a cash scarcity crisis. During this period, Nigerians increasingly turned to mobile money operators and various fintech companies.

• This shift was largely due to the frequent downtimes and operational challenges encountered on the NIBSS Instant Payment platform.
• In response to this situation, Nairametrics compiled and published a comprehensive list of mobile money operators and digital banks.
• These entities, licensed by the Central Bank of Nigeria (CBN), were recognized for their ability to process payment and banking services in Nigeria amidst the challenging times.

During the cash scarcity that plagued Nigeria in the first quarter of 2023, Nigerians were forced to resort to mobile money operators as well as digital banks due to the downtimes experienced on the NIBSS Instant Payment platform.