What we know about FG’s directive on disconnection of non-financial institutions from transfer list; Kuda, Palmpay, O’Pay, others not affected

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The Nigeria Inter-Bank Settlement System plc (NIBSS) has directed banks to disconnect all non-deposit financial institutions from its transfer list.

The NIBSS gave this directive to the banks in a circular dated Tuesday, December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223.The NIBSS in the circular made it known to the banks that the listing of non-deposit-taking financial institutions as beneficiaries is against the guidelines of the Central Bank of Nigeria (CBN) on electronic payment.

“This is to bring to your attention that listing non-deposit-taking financial institutions such as Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiary institutions on your NIP funds transfer channels contravenes the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria dated February 2014,” it said.

According to the national payment infrastructure company, while switches, PSSPs, and SAs may be permitted to carry out outward transfers as inflows to banks, they are not allowed to receive inflows.

The NIBSS added that this is because their licences do not permit them to hold customers’ funds.

“Another regulatory advice in this regard is the circular with the caption ‘Permissible Services and Products of PSSP Operation in Nigeria’, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018″ it said.

“Consequent on the above, kindly delist all Switches, PSSPs, and SAs from your NIP Outward Transfer channels only (not inwards).”

The NIBSS also said that to be allowed to carry out operation in Nigeria’s payment ecosystem, operators must obtain at least a licence from the CBN.

The licences, it pointed out include Switching and Processing, Mobile Money Operations; Payment Solution Services; and Regulatory Sandbox.

The national payment infrastructure company said this is because it is only MMOs that can hold customer funds, as directed by the CBN.

 

Opay, Palmpay, Kuda, others react

Meanwhile, the NIBSS directive has caused panic amongst customers of payment solution providers in Nigeria, like Opay, Palmpay, Kuda, Flutterwave, Piggyvest, etc. Findings by NewsClick Nigeria showed that some panicky customers have began withdrawing there funds for fear of losing same to the new directives.
However, to calm frayed nerves, the fintech companies in their numbers assured their customers of the safety of their funds while reinstating that they were not affected by the NIBSS directives.

The mobile money platforms gave the assurance messages via there social media platforms on Thursday.

 

See their messages below:  

“Hi guys! Kindly note that Piggyvest is not affected by the recent NIBSS circular. Please disregard the misinformation. All Piggyvest virtual account numbers are provided by our licensed partners and do not fall into any of the listed categories. Your funds remain safe.”

“We wish to state that OPay is not affected by the recent circular published by NIBSS. The focus is on Payment Service Solution Providers, Switches and Super Agents. OPay is a Mobile Money Operator (MMO) licensed by the CBN and insured by the NDIC. Your funds are safe and secure with OPay.”
“Hi there, Kuda isn’t affected by the recent circular from NIBSS. The circular mentions “Switches, Payment Service Solution Providers and Super Agents.” We’re a licensed microfinance bank, so we don’t belong to any of the groups mentioned. Your money remains safe with us.”
“PalmPay isn’t affected by the Nigeria Inter-Bank Settlement System (NIBSS) directive, as we are not “Payment Service Solution Providers”. PalmPay is licensed by the Central Bank of Nigeria (CBN) to hold customer funds and is covered by the Nigeria Deposit Insurance Corporation(NDIC). Please disregard any false information to the contrary. For any inquiries or concerns, please don’t hesitate to reach out to us at +234 018886888.”