CBN’s new PoS regulations boosting e-payment efficiency

By Peter Egwuatu, Assistant Business Editor

The Central Bank of Nigeria, CBN has explained that measures taken with the new Point of Sales, PoS regulations will boost payment efficiency and ensure that Nigeria’s e-payment space is safe and secure. 

In banking, convenience and security are crucial in securing customers’ trust and satisfaction. 

The implementation of new rules on Point of Sale (PoS) terminals and other payment systems reaffirms CBN’s commitment to leveraging digital channels in enhancing access to finance and credit, particularly for under-served populations. It is also a step towards improving transaction monitoring and bolstering consumer protection for the population.

For central banks in most countries, helping facilitate payments among the population remains one of their most important roles.

The Central Bank of Nigeria (CBN) has for years, looked beyond cash by entrenching digital payments among the populace.

That explained why the CBN raised the innovation bar with the release of a new e-payment guidelines titled: “Migration to ISO 20022 Standard for Payment Messaging and Mandatory Geo-Tagging of Payment Terminals”.

New policy

The new policy aligns with CBN’s move to entrench transparency , compliance and secured e-payment space.

The CBN, under the leadership of Olayemi Cardoso, is taking measures to ensure that Nigeria’s e-payment space is safe and secure.

According to CBN Governor, the Nigerian payments ecosystem has been ahead of many advanced economies, yet has not always received the recognition it deserves.

“Many innovations that other countries are only now experiencing have been part of our system for years. We must celebrate these successes, as they contribute to building our global reputation. Nigeria’s dynamic fintech ecosystem has driven financial inclusion and positioned the country as a hub of innovation in Africa,” he said.

Cardoso explained that despite a challenging external environment, Nigerian Fintechs continue to shine, attracting significant foreign investment and several have achieved global unicorn status this year. Their innovations, alongside other financial service providers, have fueled growth in transactions and made financial services more affordable and accessible for many more Nigerians.

“We must continue to leverage this channel to enhance access to finance and credit, particularly for under-served populations. However, I urge fintech companies and banks to ensure their platforms are not exploited for fraudulent activities. Strengthening the KYC onboarding process is essential to prevent malicious actors from exploiting our financial system”.

“Additionally, these institutions must prioritize improving transaction monitoring and bolstering consumer protection measures to ensure that digital channels remain safe, especially for the most vulnerable segments of our population”.

Cardoso said that while the apex bank continues to lay the foundation for price stability and foster a conducive policy environment, the role of banks in this journey remains crucial.

“At the Central Bank, we have intensified surveillance of market activities to ensure compliance. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.

X-ray of e-payment rules for PoS operators

The new circular-”Migration to ISO 20022 Standard for Payment Messaging and Mandatory Geo-Tagging of Payment Terminals”, signed by CBN Director of the Payments System Supervision Department, Rakiya Yusuf, directed banks, fintech companies and other licensed payment operators to install Global Positioning System (GPS) tracking on all Point of Sale (PoS) terminals. The move aligns with the apex bank’s bid to tighten oversight of electronic payment transactions in the country.

By this policy, all PoS devices must have “native geo-location services enabled, with Double-Frequency GPS receivers for reliable geo-location service.” The operators are also required to register each terminal with a payment terminal service aggregator and provide accurate coordinates of the merchant or agent’s business location. It further requires that every PoS machine must capture and transmit its location data at the start of a transaction. Activity outside a 10-metre radius of the registered business or service point will be flagged, while terminals that are not geo-tagged will be barred from processing payments.

The regulator said existing machines must be tagged within 60 days, and new devices must be tagged before certification and activation. “Geo-location data must be captured at transaction initiation and included in the message payload as a mandatory reporting field: Terminals not directly routed to a PTSA are not permitted to transact.

Existing terminals

“All existing terminals and newly registered terminals must ensure strict adherence always to approved MSC code per sector: All existing terminals must be geo-tagged within 60 days of this circular; new terminals going forward must be geo-tagged before certification and activation,” it said.

The measures come amid a surge in the use of PoS machines across Nigeria. Once considered an alternative, PoS agents have become a central part of the country’s cash economy, handling millions of payments daily as banks cut branch networks and ATMs often run dry.

But rise in PoS usage also raised the risks associated with the business, including rising fraud complaints involving PoS agents.

The CBN also directed payment companies to adopt a new global standard for transaction messages, known as ISO 20022, by 31 October. The ISO 20022 was designed to create a single global language for transactions, and aligns Nigeria with SWIFT’s migration timeline. However, the biggest move from the regulator is geotagging, which means that every PoS device will now be tied to exact GPS coordinates.

The standard, developed by SWIFT, is expected to improve the quality of transaction data and make both domestic and cross-border payments more secure and efficient. All PoS devices must run on Android version 10 or higher to integrate with the National Central Switch, which will host the software kit for geolocation monitoring and geofencing.

“All payment transaction messages exchanged domestically or internationally must be formatted in ISO 20022 in line with CBN and SWIFT specifications.

All Institutions

“All Institutions shall ensure complete and accurate population of mandatory data elements, including payer/payee identifiers, merchant/agent identifiers, and transaction metadata.

“All in-scope institutions must complete migration activities and be fully compliant not later than October 31, 2025,” it said.

Speaking during CBN Fair in Lagos, CBN Acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, explained that as a means of protecting banks’ customers and ensuring that they are not short-changed, the CBN launched the Unified Complaints Tracking System (UCTS), aimed at streamlining and improving the management of consumer complaints against financial institutions.

The system, alongside a USSD code (*959#) for verifying licensed institutions, enhances transparency and consumer protection in the Nigerian financial sector.

“The core objective of this engagement, therefore, is to sensitize members of the public on how the bank’s policies and innovations can enhance their lives and livelihood and contribute to the growth and development of the Nigerian economy,” she said.

Branch Controller, Central Bank of Nigeria, Lagos, Sunday Daibo, said the apex bank is taking steps to ensure more people are brought into the digital payment network.

He said: “In a world where technology is reshaping economies and redefining how people interact with financial services, alternate financial services have emerged not as an option, but as a necessity.   They are the bridges connecting the underserved populations to the formal financial system,” he said.

Industry statistics

According to Nigeria Interbank Settlement System (NIBSS) data, since their 2013 introduction, PoS terminals have become the go-to for cash for many Nigerians, with about 1,600 PoS operators per square kilometre. There were 8.36 million registered PoS terminals, with 5.90 million active/deployed as of March 2025. Transactions hit N10.51 trillion in Q1 2025, a 301.67 per cent increase from Q1 2024.

In 2024, the Nigerian Interbank Settlement System (NIBSS) had been mandated to develop a geofencing plan to prevent terminals from being used outside their deployment addresses. Under this latest directive, NIBSS will disable a terminal that has been moved beyond its certified location.

To ensure compliance, the CBN has ordered all payment terminals to be registered with a Payment Terminal Service Aggregator (PTSA) —NIBSS or Unified Payment Services Limited — with accurate latitude/longitude coordinates indicating the merchant/agent place of business/service and status.

Terminals not directly routed to a PTSA are not permitted to transact, and all operators must ensure that their PoS terminals and applications are certified by the National Central Switch (NCS).

Understanding PoS operations

Presently, the PoS terminal operators and kiosks managers are taking over the market, stepping in to make cash available to customers at premium prices. Daily earnings from a PoS business vary depending on the location, the number of customers, and the services provided.

Potential earnings range from N5, 000 to N50, 000 or more, depending on one’s business strategy and execution. With a well-planned and executed business model, the PoS operator can achieve significant daily earnings.

Tinuke Adebola, a PoS Aggregator based in Lagos, said: “PoS terminals are taking over the financial landscape. Banks are not ready to absorb rising costs of maintaining ATM terminals that require power, security, cash movement; cash handling charges and so on. Banking is profit-driven and ATM terminals are no longer meeting the profit needs of banks.”

Another PoS Aggregator, based in Central Lagos, Oloye Adigun, said that network quality, availability of PoS machines and cost of the machines are crucial in the business. 

He said bills payment, bank to bank transfer, cash receipts and payment to third parties, among others are key transactions carried out with PoS machines.

President, Bank Customers Association of Nigeria, Uju Ogubunka, said banking is fast becoming what one does and not where one goes to “Brick/mortar banking, is giving way to digital banking where transactions are completed in seconds, saving costs and providing convenience to bank customers. Consumers are looking for simple technology-driven solutions customised to meet their everyday needs,” he said.

Regulatory views

For the CBN, digital innovations ranging from self-service technologies like cell phones, online and mobile banking, Artificial Intelligence, big data, blockchain technology, distributed ledgers, among others, have greatly challenged orthodox systems and helped improve the operational efficiency of financial institutions as they respond to customer demands for more innovative services.

Recognising the growing importance of consumer protection in an increasingly digital financial landscape, Cardoso embarked on a comprehensive review of consumer protection regulations. This review sought to upgrade the regulatory framework to address emerging risks posed by the rapid growth of Fintech and digital banking solutions.

The goal was to enhance customer service standards and increasing engagement with formal financial institutions, ensuring that consumers have access to reliable, efficient, and secure financial services. Cardoso further explained that financial inclusion offers equity and opportunity for all Nigerians.   “Our goal is to ensure that 80 per cent of adults are financially included by 2026. Through partnerships with banks, fintechs, agent banking, and targeted support for women and rural communities, we will create a financial ecosystem that leaves no one behind”.

“Our journey ahead demands trust, and trust is built on transparency and accountability. As regulators, we will continue to engage openly with stakeholders, providing regular updates on policy outcomes and adjusting our strategies based on empirical evidence”.

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