The Nigeria Interbank Settlement System (NIBSS) recently issued a directive that could have a significant impact on how you use financial technology (Fintech) platforms in Nigeria. This article aims to simplify the directive and explain its potential implications for you.
What is the new directive about?
The directive prohibits Nigerian banks from allowing certain Fintech companies, known as Switching Companies (Switches), Payment Solution Service Providers (PSSPs), and Super Agents (SAs), from receiving funds directly. These companies currently play a key role in processing a wide range of transactions across various platforms, including USSD, mobile banking apps, POS systems, ATMs, and online banking.
Why was this change made?
The main reason for the directive is to ensure compliance with existing regulations governing electronic payments. Essentially, it clarifies that Fintech companies without banking licenses are not allowed to hold customer funds. This means that they cannot store your money for any length of time before it is transferred to your bank account.
What does this mean for me?
If you use a fintech that is affected by the new directive, here's what you need to know:
- You will no longer be able to directly send money to certain Fintech platforms. This means you cannot top up your account directly on the platform.
- However, you can still transfer money out of these platforms to your bank account. So, you can still access your funds and use them as needed.
- Importantly, your money is safe. This directive is designed to improve the safety and security of the financial system. Banks are subject to strict regulations and are required to safeguard customer funds.
What happens to the affected Fintech companies?
Many of these companies are expected to apply for banking licenses to comply with the new regulations. This will allow them to continue offering services that involve holding customer funds.
What about small businesses?
Small businesses that rely heavily on these Fintech platforms for their finances may need to find alternative solutions for managing their finances. They may need to consider using other Fintech platforms with banking licenses or switching to traditional banking channels.
Overall, the NIBSS directive aims to create a more secure and stable financial ecosystem for everyone. While the changes may cause some inconvenience in the short term, they are ultimately aimed at protecting consumers and promoting a healthy financial environment. Read the full article from NIBSS here.
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