CBN Mandates PoS Transaction Tracking to Boost Electronic Payment Security

The Central Bank of Nigeria (CBN) has instructed all Payment Service Providers to route transactions from Point of Sale (PoS) terminals, both physical and electronic, through a CBN-approved Payment Terminal Service Aggregator (PTSA). This directive, accompanied by a 30-day compliance window, aims to improve the tracking and monitoring of electronic transactions across the country.

This new regulation seeks to decentralize PoS transaction routing, addressing concerns over the previous centralization under a single entity. The CBN issued the instruction in a circular signed by Oladimeji Yisa Taiwo from the Payments System Management Department.

The circular emphasized that PoS transactions from both merchants and agents must be processed through any PTSA licensed by the CBN. Additionally, PTSAs are required to send transactions to processors certified by the relevant payment schemes and licensed by the CBN.

The circular read, “To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria, in August 2011, granted a Payment Terminal Service Aggregator licence to Nigeria Interbank Settlement System Plc. In furtherance of the above, the CBN hereby directs acquirers to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator.”

“PTSAs are required to send PoS transactions to only processors certified by the relevant Payment Scheme, nominated by the Acquirer, and licensed by the CBN.”

This development comes after the September 5th deadline for PoS agents to register their businesses with the Corporate Affairs Commission (CAC). Despite legal challenges, the CAC recently announced that it has begun shutting down unregistered PoS businesses that failed to register.

The directive on PoS business registration comes against the backdrop of frequent fraud incidents involving PoS terminals and the Central Bank of Nigeria’s plans to prevent trading in cryptocurrency or virtual currency.

According to a report by Nigeria Inter-Bank Settlement System Plc, PoS terminals accounted for 26.37% of fraud incidents in 2023.