The Central Bank of Nigeria (CBN) has amended the guidelines on transaction switching in the country in order to revive the dormant Nigeria Central Switch (NCS).
A circular signed and given to all banks, mobile money operators and payments services providers yesterday by CBN’s Director, Banking and Payments System Department, Mr. Dipo Fatokun, said the amendment was necessary in order to strengthen the nation’s electronic payments system.
Before now, banks and electronic payment switch operators have reportedly refused to route their e-payment transactions through the NCS as directed by CBN, a situation that has made the facility dormant.
Recall that in 2011, the operator of NCS, NIBSS said NCS’ purpose was to facilitate inter-connectivity and interoperability of electronic financial transaction switching in Nigeria.
According to the organisation, the central switch is supposed to serve as the national gateway for payment services in the country, adding that the CBN’s directive was that each bank should connect to the switch and other switches of choice.
Fatokun explained that the decision to amend the guidelines, took cognisance of the need for a competitive environment, while promoting shared services and innovation.
The circular said in parts: The bank, in ensuring that the Guidelines on Transaction Switching Services in Nigeria support the objective for payments efficiency and financial inclusion, hereby effects the following changes. Section 2.6.3 of the Guidelines which stipulates that ‘NCS shall not own or promote any card business or retails products and shall be run in accordance with international best practice’ is hereby amended to read as follows:
“The NCS shall be run in accordance with international best practice;’ To this end, the Nigeria Inter-Bank Settlement System (NIBSS) Plc shall communicate the Application Programming Interface (API) and other specifications of all its products to all banks and other licensed operators, including switches, mobile money operators and payments services providers, immediately.”
NIBSS noted that “The vision of the central switch is to achieve greater financial inclusion through a cashless economy, where the consumer can get instant services at very low rates because the centralised system has reduced costs, minimised financial wastes and significantly improves efficiency of industry targeted e-Payment schemes.”
