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CBN issues framework for management of risks in payments system

As part of efforts to mitigate risks associated with the payment system in the country, the Central Bank of Nigeria (CBN) on Monday issued a framework called the Nigerian Payments System Risk and Information Security Management Framework, to guide the management of risks in this sector.

The journey to the Payments System Vision 2020 (PSV 2020) started in 2007 with the objective of making the Nigeria Payments System internationally recognised and nationally utilised.

The CBN noted that the phased implementation of the vision and other developments in the financial space including the pursuit of the Financial System Stability Vision 2020 (FSS 2020) has stimulated an exponential growth in financial activities and hence in the volume and value of payment flows both within and across national borders.

Total volume and value of transactions through the Nigerian payment system stood at 92 billion and N427.74 billion as at September 2019, according to the data from the CBN.

The e-payment channels include Cheques, ACH/NAPS/PMS, ATM, PoS, Internet (Web), Mobile Money, NIP, EBillsPay, Remita, m-Cash, Central Pay, and Intra-bank e-payment transactions.

The rapid growth in the volume and value of financial transactions represents an important source of revenue for the providers of payment services particularly banks and other stakeholders.

The objectives of this framework include to: identify and address sources of systemic risks within the Nigerian Payments System landscape; establish sound governance arrangements to oversee the risk management framework by ensuring that risks are identified, monitored and treated; and among others to establish clear and appropriate rules and procedures to carry out the risk management objectives.

According to the regulator, the Framework is designed to guide the operators and users of the payment systems across Nigeria. These systems may be organised, located, or operated within Nigeria (domestic payments), outside Nigeria (offshore payments), or both (cross-border payments) and may involve currencies other than the Naira (non-Naira systems and multi-currency systems).

The scope of the Framework also includes any payment system based or operated in Nigeria that engages in the settlement of non-Naira transactions operating within Nigeria and those that operate across the Nigerian borders (cross border payment systems); along with their infrastructure providers and the Payment Service Providers (PSPs) that make up these systems.

The frameworks states that Cards shall be produced in accordance with CBN “Guidelines on Card Issuance and Usage in Nigeria” and the Payment Card Industry (PCI) card production security standards; where applicable.

Also, that the handling of cards through the Card Life Cycle shall be in accordance with the minimum standards as defined by PCI Data Security Standards (DSS) and CBN “Guidelines on Card Issuance and Usage in Nigeria” or as may be reviewed from time to time.

“Acquirers shall ensure that Merchants with turnover greater than N10Million/month (with the Acquirer), or as maybe prescribed by the CBN from time to time, screen their employees against the BVN Watch-list at least once a year,” the framework states.


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