Bulk payments, transfers must be processed on banks, PSPs’ platforms, says CBN
The Central Bank of Nigeria (CBN) on Wednesday said all end-to-end bulk payments or transfers shall henceforth be processed on the platforms of banks or Payment Service Providers (PSPs) for their customers.
The apex bank said such processing must also show a detailed breakdown of the accounts that receive the credits retained in the custody of the sender’s banks.
In a circular to banks and PSPs dated September 6, 2021 and signed by Musa Jimoh, director, payment system management department, the CBN said it has noticed the inherent problems associated with the processing of bulk transfers by banks and payment service providers.
Currently, the circular said originating banks and PSPs pass a single debit entry through the initiating customer’s account and multiple credits to beneficiaries without adequate records of the credit entries in their system. This distorts the audit trial and hampers transparency.
“All banks and PSPs are required to ensure full compliance with this requirement and all other payment system regulations,” the circular reads.
In line with its commitment to promote an efficient and credible payments system, the central bank recently approved new licence categorisations for participants in the payments system.
The regulation requires companies desirous of operating more than one licence category, to set up a Payments Service Holding Company (PSHC) (hereinafter referred to as a Payments Service Holding Company (PSHC)), with activities of subsidiaries clearly delineated.
This arrangement according to the CBN would prevent commingling of activities, facilitate management of risks and enable the Central Bank of Nigeria exercise adequate regulatory oversight on all the companies operating within the Group.
The affected regulated payment activities are: Mobile Money Operations Switching and Processing Payment Solution Services, and any other activity as may be approved by the CBN.
Under the arrangement, a non-operating PSHC shall be formed to hold equity investment in the separate companies in a “parent-subsidiary” arrangement. In serving as a source of financial strength to its subsidiaries, a PSHC shall maintain financial flexibility and capital-raising capabilities to support its subsidiaries.
It shall also be capable to provide and use available resources to augment the capital of its subsidiaries, in the event of financial stress or adverse condition.