Opay, Palmpay, other non-deposit financial institutions to be taken down from fund transfer channels

According to a circular from the Nigeria Interbank Settlement System Plc (NIBSS), banks in Nigeria have been directed to take down every non-deposit taking financial institution from their NIP fund transfer channels.  

The non-deposit-taking financial institutions include switching companies, payment solution service providers, and super agents. The NIP fund transfer channels include USSD, mobile banking apps, POS, ATMs, plus web and internet platforms.  

• According to the circular released by NIBSS, “listing non-deposit taking financial institutions such as switching companies (switches). Payment Solution Service Providers (PSSP), and Super Agents (SA) 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.”

The circular also clarified that while these financial institutions would be stopped from receiving inflows, they are allowed to process outflows as inflows to banks.  

• “For clarity, Switches, PSSPs, and SAs may process outward transfers as inflows to Banks but are not to receive inflows as their licenses do not permit to hold customers’ funds.”

What you should know

The enforcement of this policy will warrant that Fintechs such as Opay, Palmpay, and other payment service providers be taken down from the fund transfer channels of banks.

Essentially, these platforms will be able to facilitate outward transfers to banks, however, they won’t be able to receive fund inflows. 

Moniepoint is considered safe from this policy because it is a registered microfinance bank (Moniepoint Microfinance Bank).

Hence, it is expected that the affected Fintechs will seek to acquire banking licenses that will allow them to hold funds.  

This policy is expected to have quite an effect on small business owners as they are the major users of these Fintech platforms.

However, it is also expected that these Fintechs would expedite action in obtaining banking licenses to prevent the collapse of their businesses.