CBN Releases New Regulations and Sanctions for E-Payments in Banks and Other Financial Institutions

The Central Bank of Nigeria has issued a series of new regulations and sanctions that will govern the use of electronic payments by deposit money banks, payment solution service providers, mobile money operators, and other financial institutions.

Termed ‘Regulations on Electronic Payments and Collections for Public and Private Sectors in Nigeria’, CBN says the new regulation is a revision of its ‘Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria’ issued in 2014.

According to CBN, the regulations will guide end-to-end electronic payment across the country and also reduce the time and cost of transactions.

New regulations

The new regulations apply to all CBN-regulated entities in the country. Accordingly, all financial institutions concerned are mandated to adopt, implement and comply with the directives. This covers end-to-end electronic payments of all forms of salaries, pensions and other remittances, and revenue collections including taxes, penalties, levies, and recoveries.

The apex bank added that banks should reject payment instructions issued by an organisation with more than 20 employees for salaries, pension and taxes not transmitted through CBN-approved secure electronic payment platforms.

This means payment instructions and associated schedules are no longer to be transmitted to the DMBs through unsecured channels, such as paper-based mandates, flash drives, compact discs, and email attachments by qualifying public and private sector organisations.

Central Bank of Nigeria

Sanctions for defaulters

Going forward, failure by banks and other financial institutions to provide monthly reports on complaints and resolution status to the CBN would attract a penalty. N5,000 for each day the report is not provided.

Also, a penalty of N 1,000 per transaction would be earned for failure to consummate electronic payments within the timelines prescribed in the relevant payment channel regulation.

The regulation according to CBN will impose a penalty of N250,000 and issue a warning letter to the managing director of any bank, MMO or OFI if found guilty of submitting false or inaccurate reports.

Financial institutions who have done without help desk/contact centres for enquires, complaints and feedback on e-payment issues, are now required to comply according to the CBN. The apex bank revealed that any operator who fails to provide a help desk would bear the costs of all unresolved disputes, and added that other appropriate sanctions would be applied.

Also, receiving bank are now compelled to notify beneficiaries of electronic payments through SMS, email or any other channel with details of payment received. Failure to provide evidence that an automated notification was sent to beneficiaries who signed up for the alert services would attract a double refund of the charges deducted.

A welcome development

CBN has said that the objective of the regulations is to fully align with the core objectives of the National Payments System Vision 2020. The aim is to ensure the availability of safe, effective and efficient mechanisms for making and receiving payments from any location and at any time, through multiple electronic channels.

The new regulations by CBN is a welcome development in the Nigeria financial sector at a time when driving financial inclusion is particularly important.

The ease promised by the updated regulations would benefit Nigerians as many of the underlying complaints about electronic payments appear to have been sufficiently addressed.