The Central Bank of Nigeria (CBN) has issued a directive requiring all Point of Sale (PoS) transactions to be processed through licensed Payment Terminal Service Aggregators (PTSAs). This move, coming on the heels of of a recent blockchain infrastructure startup Zone’s partnership with the Nigeria Inter-Bank Settlement System (NIBSS), is seen as a major boost for the country’s budding blockchain ecosystem.

The new directive, detailed in a circular issued by the Central Bank of Nigeria, requires that businesses using PoS terminals for electronic payments must route their transactions exclusively through either NIBSS or Unified Payment Services Limited (UPSL), the only two approved aggregators. This is a significant regulatory move aimed at ensuring the proper tracking, monitoring, and reporting of all PoS transactions within the country.

A Move to Centralize PoS Transaction Processing

Since the introduction of PoS terminals in Nigeria, the country has seen a steady rise in electronic payments. However, the growing complexity and scale of financial transactions have also introduced challenges in transparency, fraud prevention, and real-time monitoring. By directing all PoS transactions through licensed aggregators, the CBN seeks to streamline these processes and enhance the reliability of electronic payment systems.

In its circular, the CBN explained that the new directive was necessary to ensure that all financial institutions and businesses involved in payment services comply with established standards. The circular emphasized that all licensed processors must now be integrated with both NIBSS and UPSL, giving acquirers the flexibility to choose their preferred aggregator while ensuring that the transactions remain within the regulatory framework.

Moreover, businesses are required to confirm compliance with the directive within 30 days, signaling a swift transition to the new system. Non-compliance could result in sanctions, including restrictions on the use of PoS terminals.

Background of Payment Terminal Service Aggregators

The concept of Payment Terminal Service Aggregators (PTSAs) was first introduced by the CBN in 2011 when it granted NIBSS the license to act as Nigeria’s sole aggregator for PoS transactions. The PTSA model is designed to simplify the processing of transactions between merchants, acquirers, and banks, ensuring that payment systems operate efficiently and securely.

However, as Nigeria’s payment landscape evolved, the need for additional aggregators became clear. In 2024, UPSL became the second company to receive the PTSA license, offering competition and expanding the options for acquirers and merchants.

Now, with the CBN’s latest mandate, businesses must use either of these two aggregators to ensure their transactions are processed in line with national regulations, which include the integration of certified processors and monthly reporting of transaction volumes to the CBN.

Strategic Impact of the Zone-NIBSS Partnership

This regulatory shift comes on the heels of the recent groundbreaking partnership between NIBSS and Zone, a blockchain-powered payment infrastructure company. The collaboration, announced just three weeks before the CBN’s directive, aims to revolutionize the PoS payment system by leveraging blockchain technology to improve transparency, efficiency, and security across the payment value chain.

Zone’s blockchain infrastructure enables decentralized card routing, allowing financial institutions to perform card transactions directly between PoS terminals and cardholder banks, in compliance with the new PTSA regulations. A key feature of this partnership is the automated resolution of chargebacks — an innovation that promises to resolve transaction disputes within minutes, reducing the need for manual intervention.

According to Obi Emetarom, CEO of Zone, “This partnership with NIBSS reflects our unwavering commitment to transform the payment landscape in Nigeria. By harnessing the power of blockchain technology, we are setting a new standard for reliable, frictionless, and universally interoperable payments in the industry.”

For NIBSS, the collaboration marks a major step forward in its mission to modernize Nigeria’s payment infrastructure. Premier Oiwoh, Managing Director of NIBSS, stated, “These partnerships and collaborations with key industry players represent a significant milestone in our mission to drive innovation and enhance the efficiency of the payment system.”

A New Chapter for Nigeria’s Financial System

The timing of the CBN’s directive, closely following the Zone-NIBSS partnership, is no coincidence. By issuing the directive that all PoS transactions go through regulated aggregators, the Central Bank of Nigeria is not only strengthening oversight but also paving the way for more innovative solutions like blockchain to play a greater role in the future of Nigerian finance.

The next few months will be critical for merchants, acquirers, and payment processors as they work to comply with the CBN’s directive.