Issued in the year 2014, the Central Bank of Nigeria (CBN) created its guidelines for card issuance and usage pursuant to the Central Bank of Nigeria Act 2007 for the purpose of having a regulatory framework for adequate and reasonable financial services for the public as well as ensuring high standards of conduct and management throughout the banking system.
This article will be looking at notable provisions of the guidelines regarding the following:-
- Its objectives
- Its applicability scope
- General requirements
- Roles and Responsibilities of Card Issuers
- Transaction processing
- Fraud & Risk Management
- Dispute Resolution
- Sanctions
What are the objectives of the guidelines?
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The objectives of the card issuance guidelines are :-
– To provide minimum standards and requirements for the issuance and usage of payment cards in Nigeria.
– To enable issuing banks, Other Financial Institutions (OFIs), processors and card schemes upgrade and maintain their card operations to ensure optimum security, efficiency, cost effectiveness and customer friendliness.
– To serve as a tool for Banks and OFIs to assess their card issuance portfolio.
– To ensure that consumers that carry Nigerian issued cards operate within acceptable standards.
– To encourage the use of Nigerian issued cards locally and Internationally.
What is the applicability scope of the guidelines?
The guidelines are applicable to all licensed banks and OFIs that participate in the issuance and processing of debit, credit, stored value/prepaid, virtual cards, either directly or through their subsidiaries, affiliated companies or 3rd party associated companies.
What are the provisions of the guidelines regarding general requirements?
Regarding general requirements, the guidelines provide that :-
– Only banks licensed by the CBN with clearing capacity shall issue payment cards to consumers and corporations in Nigeria.
– Banks without clearing capacity can issue in conjunction with those with clearing capacity.
– All banks shall seek approval from the CBN for each card brand and type they wish to issue.
– The usage channels, limits, and frequencies and other control measures shall be defined by the issuing banks.
– All payment card transactions shall be subject to current Nigerian Financial Intelligence Unit (NFIU) reporting requirements.
– Cards may be issued in Nigerian Naira or in any other convertible currency.
What are the roles and responsibilities of card issuers under the Guidelines?
Card issuers have roles and responsibilities assigned by the guidelines in the following areas :-
General roles
– For a card to be used abroad, the issuing banks must have carried out full KYC on the customer, as reflected in the CBN KYC manual.
Transaction Processing
– Issuers shall ensure that their card information is hosted and processed within the PCI DSS certified environment.
– Card Issuers must provide authorization services for their card transactions. This service can be outsourced.
Settlement
– Settlement of domestic transactions shall be done within the standards defined by the CBN (T +1).
Fraud & Risk Management
– Issuers shall establish board or executive management-issued AML (Anti-Money Laundering) policies that include :-
- Assessment of money laundering.
- Appointment of a Compliance officer.
- Annual Internal audit of the AML program.
- Periodic AML training for employees.
- Investigating and filing any reports of suspicious activity required under Nigerian Law.
What are the provisions of the guidelines on Dispute Resolution?
The guidelines provide that where a customer has a domestic transactions complaint, it shall be reported to the issuer. The timeline for resolution of domestic transaction disputes shall be T +2 .
Regarding international transactions, the timeline for resolution of complaints shall be as determined by the card scheme.
What are the sanctions that can be incurred for infractions under the guidelines?
Violations of the guidelines can incur sanctions that include :-
– Prohibitions from issuing new cards to customers
– Monetary penalties
– Revocation of approval to issue a specified card brand to its customers
– Any other regulatory sanction that may be deemed appropriate by the CBN.