The Central Bank of Nigeria (CBN) has set transaction limits for contactless payments in Nigeria, for commercial banks and other financial institutions to adopt, in cognizance of the risks associated with contactless payments.
In a circular issued to Banks, other financial institutions, and payment service providers in Nigeria, the CBN stated that contactless payments are now limited to N15,000 per transaction and a daily cumulative limit of N50,000. Limits above the stipulated daily cumulative limit shall be conducted using contact-based technology.
The circular signed by the Director of, Payment System Management Department, CBN, Mr. Musa Jimoh reads,
“Following the issuance of the Guidelines on Contactless Payments in Nigeria and cognizance of the risks associated with contactless payments, the Bank hereby defines transaction limits above which verification and authorization are required.
“Transaction limits for contactless payments through accounts/wallets in Nigeria shall be as follows: Transaction limit N15,000, Daily Cumulative Limit 50,000. Higher-value contactless payments are transactions that exceed the above-stated limits and shall require appropriate verification and authorization. For these transactions, existing KYC requirements and limits on the electronic payment channels shall apply”.
Contactless payment, which involves the consummation of financial transactions without physical contact between the payer and the acquiring devices, has been identified as an innovative payment option for the safe and efficient conduct of low-value and large-volume payments.
The technology enables an alternative payment method whereby payment instruments are used without physical contact with devices. This payment system offers a secure and convenient method of conducting transactions without the need for physical contact between the payment device and the payment terminal.
Examples of contactless payment instruments include prepaid, debit, and credit cards, wearable devices, tokens, and mobile electronic devices. Contactless-enabled payment terminals interact with contactless payment devices to facilitate payments.
The new transaction limits for contactless payments through accounts and wallets in Nigeria according to the CBN, are to safeguard Nigeria’s financial payment system.
In a bid to ensure that participants in contactless payments implement appropriate risk management processes and measures while keeping to the best relevant standards, the CBN has issued a 14-page Guideline for contactless payments in Nigeria.
These Guidelines provide minimum standards and requirements for the operations of contactless payments in Nigeria, as well as specify the roles and responsibilities of stakeholders involved in contactless payments in Nigeria.
All banks, financial institutions, and payment service providers are required to ensure strict compliance with the guidelines.
Check out some of the guidelines;
- Only CBN-licensed institutions shall serve as acquirers for contactless payments.
- Acquirers who engage in contactless payments shall ensure that their applications, instruments, tokens, and devices meet current standards and specifications for contactless payments.
- Acquirers who engage in contactless payments shall ensure that all contactless-enabled applications, instruments, and devices deployed have been duly certified to process contactless payment transactions by CBN or any authorized body.
- Acquirers shall execute contactless payments agreements/contracts with parties for utilizing contactless platforms for payments. All agreements/contracts shall spell out the terms and conditions, including the roles, responsibilities, and rights of all parties.
- Acquirers and processing entities shall switch all domestic contactless payments through a Nigerian switch for the purpose of seeking authorization from the relevant issuer and shall not under any circumstance route transactions outside Nigeria,
- Issuers whose payment instruments are used for contactless payments shall ensure that their applications, instruments, tokens, and devices meet current standards and specifications for contactless payments.
- Issuers whose payment instruments are used for contactless payments shall ensure that these contactless-enabled applications, instruments, and devices deployed have been duly certified to be used for contactless payments by the Bank or any authorized body.
- Issuers shall execute contactless payments agreements/contracts with parties for utilizing contactless platforms for payments. All agreements/contracts shall clearly spell out the terms and conditions, including the roles, responsibilities, and rights of all parties.
- Issuers shall activate only accounts and wallets with Bank Verification Number (BVN) for contactless payments in Nigeria.
- Payment schemes operating in Nigeria shall comply with these Guidelines and other relevant CB Guidelines/Circulars.
- Payment schemes shall ensure that all contactless transactions are processed online or/and submitted via current processing specifications.
- All payment schemes that engage in contactless payments shall ensure that the systems and schemes shall be interoperable.
- Payment schemes shall implement a documented risk management process to identify and treat risks associated with contactless payments.
- All local switching companies in Nigeria shall ensure that contactless transactions consummated by all payment instruments issued in Nigeria are successfully switched between acquirers and issuers.
- Switching Companies shall carry out periodic risk assessments of their processes and have the necessary measures to mitigate ML/TF/PF risks associated with contactless payments.
- Switching Companies that process contactless payments shall ensure that there are service-level agreements executed with stakeholders meeting minimum requirements set by the Bank.