Examining the NIBSS Circular - Information Fintechs Must Be Aware Of

This week, NIBSS circulated a circular which has been stirring up considerable discussion on the internet and among those within the fintech sector. This has consequently caused a range of inquiries to be made. What is NIBSS engaged in at present? How does this new policy affect my fintech company? mutual funds and insurance companies is not needed” The circular instructs that listing non-deposit taking financial institutions, such as mutual funds and insurance companies, is not required. Changing Companies (Switches), Payment Solution Service Providers (PSPs) and Super Agents (SA) to be the recipient organizations on your NIP funds transfer channels conflicts with the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria from February 2014. To clarify, Switches, PSSPs and SAs may process outgoing transfers as incoming payments to Banks but not to accept inflows since their licenses don't permit them to keep customers’ funds.” For the non-specialist, the words above signify that when you look on the app of your bank to transfer money, you won't come across specific financial entities (FIs) in the bank receiving the funds. Around 32 organisations that have been granted licences to be either Super Agents, a Switching Company or a Payment Solution Service Provider (PSSP) will be removed from the NIBSS Instant Payments (NIP) list with immediate effect. Recently, you may have seen names like Zinternet KongaPay (MMO: Mobile Mobile Operator), Interswitch Financial Inclusion Services (IFIS) or Crowdforce (MMO: Mobile Mobile Operator) on your beneficiary bank list. But, one wonders, if they are capable of collecting payments through bank transfer, then why did Flutterwave and Paystack have to partner with Wema Bank and Titan Trust Bank for their virtual account setup? That's certainly an unexpected turn of events! This raises the question: Why were Zinternet Kongapay and Crowdforce appearing on the list of banks participating to the NIBSS Instant Payments if they do not issue NUBAN? It implies that NIBSS brings back all schemes attached to NIP (NIBSS Instant Payments) as recipient banks regardless of whether they were switched on for incoming transactions or not. I presume this should be able to be corrected internally without much difficulty. Your fintech will cease to receive money through NIP if you are not one of the licensed deposit-taking entities like microfinance banks (like Dot MFB, Kuda, Opay), or deposit money banks (for example GT Bank, UBA, etc). you to do that). Nevertheless, on account of you being a fintech, direct integration with NIP for fund transfer is still feasible (within the bounds of your permit encompassing licenses for switching companies, payment solution service providers, and super agents). This affects payment products in only one manner. If you are a new fintech offering wallet services with the option of funding via bank transfer, you must collaborate directly with a licensed MFB, DMB, or Payment Switch. It is important to understand the settlement limit that this partnership will allow. In closing, this policy is focused on protecting customers' money through entrusting it to entities registered and approved to manage these matters. As well as this, it encourages looking carefully at its potential effects on the future of the fintech world. My sincere gratitude goes out to Chibuzor Obilom for responding to my urgent proofreading request.

Source: https://medium.com/@abiole/unpacking-the-nibss-circular-708f243fe5b5?source=rss------fintech-5