Opay, Palmpay Survive As NIBSS Orders Banks to Remove Flutterwave, Paystack Others From Funds Transfer Channel (See List)

Deposit Money Banks (DMBs) have been directed by the Nigeria Inter-Bank Settlement System (NIBSS) Plc to yank off all financial institutions not licenced to hold customers’ funds from their NIBSS Instant Payment (NIP) outwards platforms.

In a circular dated December 5, 2023, the agency said allowing these firms, which obtained licenses to operate as Payment Solution Service Providers (PSSPs), Switching Companies, Super Agents and others from the Central Bank of Nigeria (CBN), to collect funds from customers was in contravention of the law.

NIBSS said only commercial banks and others authorised by the central bank to receive inflows from customers are allowed to offer such service, as the PSSPs, Switching firms and Super Agents cannot process such functions.

“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.

“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.

“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 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.

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

This new directive will affect financial technology companies like Flutterwave, Paystack, and others which obtained licences to operate as PSSPs, to serve purely as a payment gateway. This means users of Paystack and others cannot have funds deposited into their accounts. as they cannot receive money from anyone.

However, this will not affect Mobile Money Operators (MMOs) like Opay, PalmPay, Smartcash, MoniePoint, MoMo and others, which can keep the funds of customers.

The circular, which was dated Tuesday, December 5, 2023, has generated mixed reactions as a few media platforms, listed some mobile money operators (MMOs) like Opay, PalmPay, and others are part of the financial technology (fintech) firms affected by the directive.

In the disclosure sighted by this newspaper, the NIBSS specifically said those not licensed to accept deposits are Super Agents, Switching Companies, and Payment Solution Service Providers (PSSPs).

A look at the website of the Central Bank of Nigeria (CBN) showed that 47 companies were issued licences by the CBN to operate as Super Agents, 75 firms were authorised by the apex bank to function as PSSPs, and 16 fintechs have the Switching and Processing licence.

Below is the full list, as obtained from the CBN, of the three categories of fintechs affected by the NIBSS directive;