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Foreign Exchange Controls in Nigeria: Updated Rules for BDCs

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BY SEUN TIMI-KOLEOLU AND PROMISE ITAH

Introduction

On February 10, 2026, the Central Bank of Nigeria (CBN) issued a circular on Participation of Licenced Bureau De Change in the Nigerian Foreign Exchange Market (NFEM) (the “Circular”) allowing licensed Bureau de Change (BDC) to operate as intermediaries in the NFEM (the official foreign exchange market). This represents a significant policy shift, as BDCs had been excluded from accessing foreign exchange (FX) through official channels since July 2021 due to practices deemed to have contributed to exchange rate instability.

The Circular builds on the 2024 regulatory reforms, which strengthened capital requirements, licensing standards, reporting obligations, and compliance expectations for BDCs. According to CBN, the decision to re-admit BDCs aims to improve FX liquidity and ensure that legitimate end users can access foreign exchange more reliably.

In this newsletter, we highlight the key rules for BDC participation in the foreign exchange market and their practical implications.

What Are the New Rules for BDC Participation?

Under the Circular, licensed BDCs may participate in the NFEM, subject to the following requirements.

a. Weekly FX Purchase Limit: To manage liquidity and prevent excessive exposure, each licensed BDC may purchase up to $150,000 per week from any authorized-dealer bank. All purchases must be conducted at the prevailing market rate, with no preferential pricing arrangements.

b. Mandatory Resale Timeline and Position Restrictions (NFEM-Sourced FX): Any FX acquired under this scheme must be sold or used within 24 hours. BDCs cannot hold NFEM-sourced FX in their accounts beyond this period, and any unused balances must be returned to the market the next day. This rule prevents speculative hoarding and ensures that FX flows efficiently to end-users.

c. Settlement and Payment Structure: All FX transactions must be processed through bank accounts at licensed financial institutions. BDCs cannot route FX through third parties or non-customer intermediaries. Cash settlement is permitted, but it is strictly limited to no more than 25% of the transaction value, with the remainder required to pass through the banking system. This ensures that FX flows are traceable and transparent.

d. Compliance and Regulatory Oversight: In addition to operational limits, BDCs remain subject to enhanced compliance obligations:

i. Authorised dealers must perform full Know Your Customer (KYC) and due diligence on any BDC client before selling FX.

ii. Licensed BDCs are required to submit timely electronic reports of their transactions to the CBN and comply fully with all Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) rules.

iii. Anonymous transactions or round-tripping (buying FX at official rates and reselling it elsewhere for profit rather than for legitimate use) are strictly prohibited.

The Circular further reinforces that BDCs must operate within the broader Regulatory and Supervisory Guidelines for Bureau de Change Operations in Nigeria 2024.

What Are the Practical Implications?

a. For BDC operators:

i. Immediate Turnaround: BDCs must find buyers immediately or face the administrative burden of selling funds back to the NFEM within 24 hours;

ii. Strategic Forecasting: To avoid the inconvenience and potential losses involved in returning unused funds, BDCs must accurately forecast customer demand before purchasing their weekly $150,000 limit;

iii. Digital Accountability: The new framework emphasizes a “digital footprint,” requiring BDCs to integrate their IT systems with the CBN for real-time monitoring and reporting.

b. For the market and the public:

i. Easier access: The participation of BDCs in the official exchange market is expected to make it easier for the average person (travelers, students etc.) to obtain FX. Since BDCs are widely accessible to these users and are required to sell NFEM-sourced FX within 24 hours, supply of FX is expected to circulate more quickly to end users.

ii. Price stability: By prohibiting the hoarding of FX, the rules are expected to help reduce the extreme price jumps often seen in the parallel market.

Conclusion

The reintegration of licensed BDCs into Nigeria’s FX market provides a transparent and reliable channel for accessing foreign exchange. For businesses, it is likely to enhance predictability and reduce reliance on informal sources, while for BDCs, it reinforces the need to operate strictly within the established regulatory framework. The CBN expects that, when properly implemented, this structure will promote smoother FX flows, support effective business planning, and contribute to overall market stability.

 

For further information on any of the issues covered in this newsletter, please contact us at info@pavestoneslegal.com. At Pavestones, we deliver quality and innovative legal support across diverse industries, helping businesses operate in compliance with applicable laws and regulations to drive sustainable business growth.

RECAPITALIZATION IN THE NIGERIAN BANKING SECTOR: LEGAL CONSIDERATIONS AND STRATEGIC OPTIONS

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BY SEUN TIMI-KOLEOLU AND MARK IMONITIE

Introduction

The CBN in its March 28, 2024 circular announced an upward review of the minimum capital requirements for banks in Nigeria, mandating banks to raise their minimum paid-up capital by March 31, 2026 as follows: ₦500 billion for international commercial banks; ₦200 billion for national commercial banks; ₦50 billion for regional commercial banks; ₦50 billion for national merchant banks; ₦20 billion for national non-interest banks; and ₦10 billion for regional non-interest banks.

As the CBN deadline approaches, this newsletter following our newsletter earlier written on the subject of recapitalization, outlines the options available to banks yet to meet the CBN’s recapitalization requirements and key legal considerations.

 

  1. Legal Considerations

The process of recapitalization requires strict compliance with the provisions of the law; the procedures set out by the CBN, and other applicable regulatory authorities.

Below are some legal considerations for banks seeking to recapitalize.

i. Conduct legal due diligence and Anti-Money Laundering screening

Banks seeking to recapitalize are required to conduct due diligence and effective anti-money laundering screening/checks on prospective investors, to mitigate the risk of injecting capital from fraudulent sources into the bank. Measures for due diligence include know your customer, customer due diligence and suspicious transactions monitoring. The CBN is empowered to enforce strict enforcement of checks for all prospective and significant shareholders as well as directors and senior management staff of banks.

ii. Obtain corporate approvals

Banks are required to obtain board and shareholders’ approval, ensuring alignment with the Banks and Other Financial Institutions Act (BOFIA) 2020 as amended and good corporate governance practices, for sustainable compliance. The resolutions approving the recapitalization among other documents, will be provided to CBN and SEC in the request for approval for recapitalization.

iii. Obtain regulatory approvals

A bank seeking to recapitalize is required to submit a detailed application to CBN and the Securities and Exchange Commission (SEC) containing the means by which the bank will meet the recapitalization target. Documents to be provided to the CBN and SEC for approval include, written request for approval, board resolution, shareholders resolution, prospectus, etc.

iv. Preparation and execution of transaction documents

Depending on the choice method of recapitalization which the bank will apply, transaction documents will to be prepared and executed, after due negotiation by relevant parties. For example, if the bank seeks to recapitalize through an acquisition, documents such as share sale and purchase agreement, non-disclosure agreement etc. will be prepared and executed by the relevant parties.

v. Filing necessary post transaction documents

Upon completion of the transaction, banks will be required to file necessary post-issuance returns to the CBN and SEC. Also, the bank’s record with the Corporate Affairs Commission (CAC) will need to be updated.

 

B. Strategic Options

In the CBN’s circular, the CBN prescribes the following options as available to Nigerian banks seeking recapitalization:

  • Public Offers
  • Rights Issue
  • Private Placements
  • Mergers and Acquisitions
  • Upgrade or downgrade of license authorization

i. Public Offers

For the purpose of bank recapitalization, a public offer involves issuing new shares or securities to the general public through stock exchanges or regulated markets to raise required capital.

This process enables larger investor participation to meet capital adequacy thresholds and provide large-scale funding.

ii. Rights Issue

This refers to the method of recapitalization where a bank offers existing shareholders the right (but not the obligation) to purchase additional new shares. By the use of rights issue, the bank will be able to raise additional capital while minimizing ownership dilution for existing shareholders.

iii. Private Placements

Private placement refers to a method of recapitalization where the bank raises capital by directly selling its shares to a select group of pre-identified investors like institutions or high-net-worth individuals and bypassing public markets.

This approach enables quick funding, offers confidentiality, lower costs, and regulatory exemptions compared to public offerings, making it suitable for mandatory recapitalization.

iv. Mergers and Acquisitions (M&As)

For bank recapitalization, M&A involves undercapitalized banks merging with or being acquired by stronger banks to consolidate capital base, assets, and operations, thereby meeting the minimum share capital set by the CBN.

Mergers create a unified entity with enhanced scale and stability, while acquisitions allow financially robust banks to absorb others, thereby boosting combined equity without new share issuance. An example of the use of this strategy for recapitalization is the concluded merger between Union Bank of Nigeria and Titan Trust Bank, with Union Bank of Nigeria being the surviving entity.

v. Upgrade or downgrade of license authorization

This refers to adjusting a bank’s operational category—such as from national to regional or vice versa—under CBN guidelines to align with the new minimum capital requirements.

An upgrade expands scope and requires higher capital for broader operations, while a downgrade scales back activities to a lower-threshold license, avoiding full recapitalization costs.

 

CONCLUSION

As the March 2026, deadline for recapitalization looms, Nigerian banks stand at a pivotal crossroad where strategic action today would secure tomorrow’s dominance.

Rights issues, mergers, and compliant capital raises provide banks with a launchpad for expansion and economic impact.

Banks yet to recapitalize are therefore required to prioritize legal diligence under CBN/SEC guidelines and mitigate dilution risks pursuant to the provisions of the Companies and Allied Matters Act 2020.

The recapitalization wave is expected to reshape Nigeria’s financial landscape, and provide a pathway for enduring growth and stability in Nigeria’s banking sector.

 

About us:

Pavestones is a full-service legal practice, registered with the Securities and Exchange Commission as a Capital Market Solicitor. Pavestones deliver quality and innovative legal support across diverse industries, helping clients operate in compliance with applicable laws and regulations to drive sustainable business growth.

THE CENTRAL BANK OF NIGERIA REGULATORY UPDATE: REVISED CASH POLICIES AND AUTHORISED PUSH PAYMENT FRAUD GUIDELINES

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BY SEUN TIMI-KOLEOLU AND OMODELE FATODU

Introduction

The Central Bank of Nigeria (“CBN”) has recently issued two regulatory communications: (i) the Revised Cash-Related Policies, effective 1 January 2026; and (ii) the Draft Guidelines for Handling Authorised Push Payment (“APP”) Fraud. Both documents introduce new operational requirements for financial institutions and provide guidance for customers, lenders, and payment service providers.

1. REVISED CASH-RELATED POLICIES – Key Changes

  1. Removal of Cash Deposit Limits – The CBN has abolished previously applicable cash-deposit limits. Under the former regime, customers were subject to cumulative deposit limits and charges for excess cash deposits. These thresholds and associated fees have now been completely removed.
  2. Upward Adjustment of Withdrawal Limits – Individuals may now withdraw up to ₦500,000 weekly, while corporate entities may withdraw up to ₦5 million. Withdrawals exceeding these limits will attract processing fees of 3% for individuals and 5% for corporate entities.
  3. Elimination of Special Withdrawal Authorisations – The requirement for customers to seek special CBN approval for unusually large cash withdrawals (previously ₦5 million for individuals and ₦10 million for corporate entities) has been discontinued.
  4. Enhanced Obligations for Financial Institutions – Banks are required to ensure that ATMs remain adequately funded and stocked with various denominations. They must maintain a designated account for processing fees charged on withdrawals above the stipulated limits. Banks are also required to submit specified periodic reports, including returns on cash withdrawals above the specified limit and returns on cash deposits to the CBN to support ongoing compliance and supervision.

2. CBN DRAFT GUIDELINES ON APP FRAUD

What is APP Fraud?

APP fraud occurs when a customer is tricked into voluntarily initiating a payment to an account controlled by a fraudster. Although the customer authorises the transfer, it is done under false pretences through deception, manipulation, impersonation, or other fraudulent means.

Key Highlights

  1. Standardised Reporting Framework for Fraud Incidents – Customers are required to report suspected or actual APP fraud to their financial institution within 24 hours, with allowance for reporting within 72 hours where reasonable justification is provided. The guidelines state that “reasonable justification” may include, but is not limited to, circumstances beyond the control of the customer such as illness, force majeure events, time of becoming aware of the fraud, security constraints, or demonstrable unavailability of reporting channels. Upon receiving a report, the institution must acknowledge receipt within 24 hours, open a case file, and begin processing the complaint in line with the guidelines.
  2. Mandatory Inter-Bank Notification within 30 Minutes – Where an APP transaction involves more than one financial institution, the institution that first receives the complaint must notify the other insitiution within 30 minutes of receiving the customer’s complaint.
  3. Defined Timelines for Customer Refunds – Where a customer is entitled to a refund, the responsible institution must complete it within 48 hours after concluding the investigation. In cases involving multiple institutions, refunds must be completed within 16 working days of the complaint.
  4. Strengthened Fraud-Prevention and Consumer-Protection Duties – Financial institutions must provide 24/7 fraud-reporting channels and implement an early warning system to prevent and detect APP fraud in a timely manner. They are required to ensure that customers are aware of available reporting channels and receive clear, accessible, and ongoing education on APP fraud risks and reporting procedures. Financial institutions must also carry out quarterly APP fraud awareness campaigns across multiple media and languages, and ensure that any information shared with other institutions complies with the Nigerian Data Protection Act 2023.
  5. Customer Refund Eligibility – Refund eligibility is subject to the following conditions:
    • The customer authorised the transaction under false pretence and had no reason to suspect fraud;
    • The customer reported the fraud within 72 hours and cooperated with the investigation;
    • There is no evidence of negligence, collusion, or criminal intent by the customer; and
    • The financial institution failed to implement appropriate fraud detection, warning, or verification protocols that could have prevented the transaction.

    Financial institutions are not obligated to reimburse where:

    • The customer acted fraudulently or negligently;
    • The customer delayed reporting beyond 72 hours without reasonable justification; and
    • The transaction occurred before the effective date of the guideline, unless the institution voluntarily applies it retroactively.

Conclusion

CBN’s Revised Cash-Related Policies and Draft Guidelines on APP Fraud introduce updated operational requirements that affect both financial institutions and customers. Banks and payment service providers should review these documents to ensure compliance ahead of the effective dates, while customers should familiarise themselves with the reporting procedures and eligibility criteria to protect their interests in cases of APP fraud.

BANKING AND FINANCE IN NIGERIA: THE REGULATORY FRAMEWORK AT A GLANCE

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SEUN TIMI-KOLEOLU AND EBIKENIYE BEST

 

In Nigeria, the importance of a well-regulated banking system cannot be overstated, especially in light of the sector’s influence on economic growth, investor confidence and public trust. To achieve this, a robust regulatory framework has been established, one that combines statutory legislation, institutional oversight and evolving policy guidelines to ensure stability and transparency. Both local and foreign businesses wishing to operate in the banking and fintech sector must understand the regulatory framework.

In-view of the foregoing, we have provided a snapshot of the regulatory framework.

a.     Banks and Other Financial Institution Act, (BOFIA) 2020

BOFIA 2020, which replaced the 1991 Act,[1] is the primary law governing Nigeria’s banking sector. It sets out the Central Bank of Nigeria’s regulatory powers, including the issuance and withdrawal of banking licenses, approval of new or closed bank branches, and the restructuring of banks. It also covers the operation of foreign banks in Nigeria and formally recognises digital banking, providing a clear legal basis for regulating fintech activities.[2]

b.    The Central Bank of Nigeria Act 2007 (“Act”)

The Act established the CBN which is the primary regulator of the Nigerian banking sector. It is charged with the overall control and administration of banks and other financial institutions in Nigeria. The responsibilities of the CBN include but is not limited to (i) ensuring monetary and price stability; (ii) promoting a sound financial system in Nigeria; (iii) issuing guidelines and circulars relating to its responsibility to banks, foreign exchange market, and other financial institutions.[3]

c.     The Companies and Allied Matters Act, (CAMA) 2020

CAMA establishes the Corporate Affairs Commission (CAC), which is charged with the regulatory powers over all registered companies in Nigeria, including banks and other financial institutions. The CAC is responsible for the incorporation of all corporate entities in Nigeria, including banks and other financial institutions; Under CAMA, certain corporate governance principles were introduced which require a public company to have at least three independent directors and prohibit a person from being a director in more than five public companies. These provisions apply to a bank registered as a public company.

d.    The Nigerian Deposit Insurance Corporation Act 2006 (“NDIC Act”)

The NDIC Act established the NDIC which provides regulatory oversight over Deposit Money Banks (DMBs), commonly known as commercial banks. The NDIC is responsible for insuring the deposit liabilities of licensed banks and offering financial assistance to insured institutions facing difficulties, in order to protect depositors. It also plays a key role in supporting the formulation and implementation of banking policies by the monetary authorities.

In cases of bank failure, the NDIC is empowered to take over the management and control of the affected institution, ensuring an orderly resolution or closure without disrupting the stability of the banking system.

e.    Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 (FEMM Act)

The FEMM Act establishes the regulatory framework for conducting and controlling foreign exchange transactions in Nigeria. It mandates that transactions in the foreign exchange market be carried out in convertible foreign currencies and specifies the permissible monetary instruments that may be used within the market.

f.     The Financial Reporting Council of Nigeria (FRCN) Act 2011

Under the FRCN Act, the FRCN is responsible for developing and enforcing standards on accounting, auditing, corporate governance, and financial reporting. These responsibilities extend to private companies and public interest entities, including banks and other financial institutions, ensuring transparency, accountability, and sound financial practices across the sector.

g.    The Investment and Securities Act (ISA) 2025

The ISA establishes the Securities and Exchange Commission (SEC) which regulates capital market activities and public companies in Nigeria. While a licensed bank will not in the ordinary course of its banking activities fall within the regulatory purview of the SEC, where such a bank is a public company or its affiliate undertakes capital market activities, the bank or the relevant affiliate will fall within the SEC’s purview.

h.     Nigerian Financial Intelligence Unit (NFIU) Act, 2018

As Nigeria’s central national agency for financial intelligence, the NFIU enforces compliance with anti-money laundering and combating the financing of terrorism. This means that the NFIU ensures that banks and other financial institutions comply with the Money Laundering (Prevention and Prohibition) Act, 2022, Terrorism (Prevention and Prohibition) Act, 2022 and the NFIU operational guidelines.[4]

Conclusion

As Nigeria positions itself in the global financial space, the effectiveness of its regulatory institutions will continue to play a significant role. Companies in the banking and fintech sector are advised to liaise with professional advisers to ensure compliance and facilitate ease of doing business.

Further information, do not hesitate to reach out to us.

[1] https://pavestoneslegal.com/revised-banking-law-in-nigeria-bofia-2020/

[2] https://pavestoneslegal.com/5074-2/

[3] https://pavestoneslegal.com/licensing-requirements-for-banks-and-other-financial-institutions-in-nigeria/

[4] https://pavestoneslegal.com/anti-money-laundering-regulation-in-nigeria-recent-updates/

THE REGULATION OF OPEN BANKING IN NIGERIA

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By Seun Timi-Koleolu and Praise Adetunmibi
Introduction

The Banking sector worldwide is undergoing major changes and the key drivers of these change are You and I. In today’s world (described as the Experience Economy by Pine and Gilmore, Harvard Business Review 1998), we all want easier, seamless and personalised digital banking experiences.

One way banks in the United Kingdom and other countries are meeting this need is with the use of Open Banking. Open Banking is the banking practice that grants third-party financial service providers access to consumer banking transactions and financial data through the use of Application Programming Interfaces (APIs). Such access must be only to the extent approved by customers.

It is expected that with Open Banking, customers would: (i) view and manage their various bank accounts from one centralized location; (ii) grant easy access of account information to creditors when applying for a loan rather than gathering reports from various banks; (iv) have easier accounting processes; and (v) enjoy competitive banking rates, amongst other benefits.

In view of the foregoing and with a view to enhance financial inclusion, improve competition in the financial services space and promote efficient services, the Central Bank of Nigeria (CBN) on the 17th day of February 2021, issued the Regulatory Framework for Open Banking in Nigeria (“Framework”).

In this article, we have highlighted some of the key provisions of the Framework.

1.Scope – The Framework applies to banking and other related services including: (i) payments and remittance services; (ii) collection and disbursement services; (iii) deposit-taking; (iv) credit; (v) personal finance advisory and management; (v) credit ratings/scoring; (vi) leasing/hire purchase; and (vii) mortgages.

2.The Participants – The Framework regulates the following 4 Participants in Open Banking: (i) The Providers (who use API to provide data or a service to another participant); (ii) The Consumers (who uses API released by the providers to access data or service); (iii) The Fintech companies (they may be Providers or API Users; in such instance, they assume the responsibilities of the role they play at any point in time); (iv) the Developer Community (individuals and entities that develop APIs for participants based on requirements). The responsibilities of each of the Participants are set out in the Framework.

3.The Regulator – Though not listed as a Participant, it is pertinent to note that the CBN is the primary regulator of Open Banking in Nigeria. The CBN is to be responsible for the maintenance of an Open Banking Registry and the development of the Common Banking Industry API Standards. These Standards are to be developed within 12 months of issuance of the Framework.

4.Categories of Financial Data that can be shared through APIs – The Framework divides data and services that can be shared through APIs into four broad categories and defines the risk level associated with each category.

S/N Data and Service Category Risk Rating Participants who can access this data
i. Product Information and Service Touch Points – includes data on products provided by Participants to their customers and the access points e.g. ATM/POS/Agents locations, website/app addresses, fees, rates etc. Low All Participants (including participants without licences and those in the CBN Sandbox).
ii. Market Insight Transactions (MIT) – this includes data exchanged for the purpose of gathering statistics of products, services and segments. Such information must not be associated to any individual, customer or account. Moderate All Participants (as above).
iii. Personal Information and Financial Transaction (PIFT) – this includes data at an individual customer level either on general information on the customer (e.g., KYC data, total number of accounts held, etc) or data on the customer’s transaction (e.g., balances, bill payments, loans, recurring transactions on customer’s accounts, etc). High These can be accessed by Participants in the CBN Sandbox; licenced Payment Service Providers and other financial institutions; and Deposit Money Banks.
iv. Profile, Analytics and Scoring Transaction (PAST) – this includes data of a customer that analyses, scores or gives an opinion on the customer e.g., credit score, incoming ratings etc. High and Sensitive These can only be accessed by licenced Payment Service Providers and other financial institutions; and Deposit Money Banks.

5. Customer Protection – The implementation of Open Banking is hinged on the explicit consent of the customers/end users of financial products. The Framework mandates Participants to obtain the consent of customers in the customer’s preferred language and to ensure the security of financial data of such customer.

6. Liability for Misuse of Data – Participants and their partners would be jointly liable for any loss occurring to the customer as a result of data sharing; save for where the Participant can prove wilful negligence or fraudulent act against the customer.

Conclusion

As earlier stated, there are various benefits attributable to Open Banking including more ease in banking transactions. There is, however, a major risk of data breach or the misuse of consumer data. It is imperative that data protection regulations are properly implemented in Nigeria to avoid grave financial losses to consumers.

Data Protection Compliance Organisations and Legal Advisers1 will be expected to play a major part in supporting Participants and regulators in protecting consumers, as Open Banking develops in Nigeria.

CONTACTLESS PAYMENT METHODS – THE REGULATION OF QUICK RESPONSE (QR) CODES IN NIGERIA

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By Seun Timi-Koleolu and Eustace Aroh

Introduction

A cashless world was hard to imagine in the 80s and 90s (at least for most of us). It was unimaginable for you to successfully make payments, without cash, a debit or a credit card. What exactly were you to use then?! Right before our eyes, the world began to change, the mobile phone became more than a phone, it became your everything; your notepad, your office, your camera and your payment device (with the use of Quick Response [QR] Codes and Near Field Communication [NFC] tags).

The use of QR Codes as a payment method was introduced by Alipay in 2011 and became a widely used method of payment in China. NFC tags (which are chips built into smartphones) were used in countries like the United Kingdom first.

In Nigeria, QR Codes as a payment method is gradually gaining traction. Fintech companies such as Paystack and Flutterwave now offer sellers and service providers the ability to receive payment by generating and printing or sending a QR Code to their customers even over social media platforms such as Facebook. Many of the traditional financial institutions (such as First Bank and Guaranty Trust Bank) have updated their mobile applications to enable Customers utilize QR Codes as a payment method.

To properly regulate the use of QR Codes as a payment means in Nigeria, the Central Bank of Nigeria (CBN) on January 13, 2021, issued a Framework for QR Code Payments in Nigeria (“Framework”). We have highlighted some salient provisions of the Framework below.

Who are the Participants?

The major participants to a QR Code transaction as stated in the Framework are:

  1. The Merchant – this is the store owner, seller or service provider that has requested for payment through a QR Code.
  2. The Customer – this is the individual who is to pay the Merchant using the QR Code.
  3. The Issuer – this is the financial institution of the Customer.
  4. The Acquirer – this is the financial institution of the Merchant.
What are their Obligations?
  1. Where a Merchant elects to receive payment through QR Codes, he can only display QR Codes approved in Nigeria.
  2. The Merchant is also expected to comply with all extant CBN regulations and the rules of the Acquirer.
  3. The Customer is expected to use the QR Code application (provided by its financial institution i.e. the Issuer) without modifications and adhere to any security protocol of the Issuer.
  4. The Issuer is required to provide the Customer, upon request, with a QR Code Payment application that complies with the QR Code regulations; and ensure that all Customers update the application within 14 days of deployment of an update or patch.
  5. Issuers are also required to send a quarterly risk management assessment report to the Director, Payments System Management Department, CBN.
  6. The Acquirer is expected to ensure the proper use of the QR codes at the Merchant’s location or platform; and ensure the technology and protocol used for QR code conforms with the QR Code payment regulations.
  7. The value of each QR Code transaction must be delivered by the Acquirer to the Merchant within a day after the transaction.
  8. Both the Acquirer and the Issuer are to ensure the security of their system in such transactions.
  9. Where a switch or payment service provider is involved, they are required to facilitate interoperability between the Issuer and Acquirer and comply with the Framework and other CBN regulations on electronic payments.
Other Provisions of the Framework

The Framework adopts the Merchant-presented mode specification for Nigeria (as opposed to the customer-presented mode) which means the Merchant has to present the QR Code for buyers to scan in order to conclude the payment transaction.
Please also note that the Nigeria Inter-Bank Settlement System Plc (as the Payment Terminal Service Aggregator) is to certify QR Codes, the payment applications, updates and patches.

Conclusion

Payment with the use of QR Codes in Nigeria is gradually becoming the preferred choice for businesses in Nigeria as it is an affordable alternative to utilizing POS solutions. The issuance of the Framework is a positive step to encourage innovation in financial services and promote the secured use of QR Codes in Nigeria