The Central Bank of Nigeria ("CBN") has issued a circular introducing new requirements relating to ultimate beneficial ownership ("UBO") disclosure, localisation of payment transaction data and market structure restrictions within the Nigerian payments ecosystem. The circular applies broadly to deposit money banks, microfinance banks, mobile money operators, switching companies, payment service providers, super agents and other licensed participants in the payments sector.
Among other things, the circular introduces mandatory local storage and management of payment transaction data generated within Nigeria, new disclosure obligations relating to beneficial ownership, and restrictions on the extent to which participants with significant market share in consumer issuing activities may also participate in merchant acquiring activities (and vice versa). The circular also introduces monthly market share reporting requirements.
Key Developments
1. Ultimate Beneficial Ownership Disclosure
Financial institutions and payment service providers are required to maintain accurate and up-to-date records of the ultimate beneficial owners of significant shareholders and make such information available to the CBN upon request.
2. Data Localisation
All institutions facilitating payments within Nigeria must ensure that payment transaction data generated within Nigeria is stored and managed in Nigeria. Full compliance is required by 1 January 2027.
3. Market Structure and Market Share Restrictions
The circular provides that:
• any licensed financial institution holding more than 25% market share in consumer issuing activities may not hold more than 15% market share in merchant acquiring activities during the same rolling twelve-month period; and
• any licensed financial institution holding more than 25% market share in merchant acquiring activities may not hold more than 15% market share in consumer issuing activities during the same rolling twelve-month period.
To facilitate regulatory oversight, the circular introduces monthly market share reporting obligations for regulated entities. Institutions affected by the new market share restrictions are required to take the necessary measures to achieve compliance by 31 December 2026.
The circular applies the existing regulatory definitions of consumer issuing and merchant acquiring activities contained in the extant Guidelines on the Operations of Electronic Payment Channels in Nigeria. The scope of those definitions, and the methodology for measuring market share, are likely to be important areas of focus for industry participants seeking to assess whether and how the new restrictions may apply to their business models.
Initial Observations
The circular represents one of the most significant interventions in the structure of Nigeria's payments market in recent years.
While the UBO disclosure requirements largely formalise existing expectations under AML/CFT frameworks, the data localisation and market structure provisions are likely to attract the greatest attention from industry participants. In particular, the requirement that payment transaction data generated within Nigeria be stored and managed locally may require some operators to revisit existing data architecture, cloud hosting arrangements and cross-border processing practices.
The market structure provisions may, however, prove to be the most consequential aspect of the circular. By restricting the extent to which a participant with significant market share in consumer issuing activities may also participate in merchant acquiring activities (and vice versa), the CBN appears to be taking a more interventionist approach to concentration risk within the payments ecosystem. Depending on how the thresholds are measured and applied in practice, these requirements could influence future growth strategies, acquisitions, partnerships and market positioning across the sector.
The circular signals a continued regulatory focus on competition, resilience and domestic oversight within the Nigerian payments ecosystem. Institutions operating in the sector should begin assessing the operational, governance and compliance implications of these requirements well ahead of the applicable implementation deadlines.