| CBN Circulars & Publications |    1884 VIEWS  |
| CBN Circulars & Publications | |
| 1884 VIEWS | |
 |
Friday,
October 11, 2019 /09:31AM / By CBN
The Central Bank of Nigeria (CBN) in furtherance of its mandate for the development of electronic payment in Nigeria hereby issues the regulation for the operation of indirect participants in the payments system with effect from 11th November 2019.
Regulation For The Operation Of Indirect Participants In The Payments System
1.0 Preamble
1.1.1. set out the procedures for effective integration of indirect participants in the payments system in Nigeria;
1.1.2. standardise the operation of indirect participants in the payments system, taking into cognisance their operational risks;
1.1.3. provide mechanism and framework for the clearing and settlement of indirect participants payment instruments through the direct participating banks; and
1.1.4. strengthen indirect participants for effective contribution to digital financial services in Nigeria.
3.0 General Principles
3.1 Only direct participating banks are
permitted to settle payment obligations of indirect participants.
3.2 An indirect participant shall settle all its payments obligations through only one direct participating bank per payment scheme at any given time.
3.3 The relationship between a direct
participating bank and an indirect participant shall be governed by a
Settlement Agreement.
3.4 Where the account of an indirect participant
with a direct participating bank is not adequately funded, the direct participating
bank may decline further settlement services to the indirect participant and
inform the payment processor accordingly.
3.5 Except as otherwise agreed, a
direct participating bank or an indirect participant shall give at least thirty
(30) days’ notice to the other party before terminating the Settlement
Agreement for any other reason apart from the circumstances in 3.4. The
terminating party shall notify the Payments Service Provider (PSP) of its
intention to terminate.
3.6 A direct participating bank and an
indirect participating bank shall enter into a bilateral agreement to guide the
relationship.
3.7 Where an indirect participant
connects directly to a PSP for transaction processing, the indirect
participant, direct participating bank, and the PSP shall enter into a
tripartite Agreement.
3.8 Where the direct participating
bank is not a settlement bank, it shall obtain written consent of its
settlement bank prior to establishing settlement relationship with an indirect
participant.
3.9 The settlement limits agreed
between the direct and indirect participants shall be monitored and enforced as
agreed by the parties.
3.10 Indirect participants shall process their e-reference instruments through the direct participating bank or directly, through the Nigeria Inter-Bank Settlement System (NIBSS).
a. In the latter option, NIBSS shall indicate the source (bank, indirect participant) of the e-reference requests.
b. The receiving bank shall not discriminate between e-references originating from banks and indirect participants.
4.0 Obligations of Indirect Participants
An
indirect participant shall:
4.1
comply with the applicable provisions of the Nigeria Bankers’ Clearing System
Rules (NBCS);
4.2 maintain a settlement account(s) with the direct participating bank wherein the net settlement position of the indirect participants shall be credited or debited as may be appropriate after each settlement session (hereinafter called “the Settlement Accountâ€);
4.3 pledge collateral in an amount
as agreed with the direct participating bank which shall serve as security for
settlement obligations;
4.4 indemnify and hold the direct
participating bank harmless in respect of any liability or loss whether direct
or indirect that may arise as a result of this agreement; accordingly, indirect
participants hereby undertake to be primarily responsible and liable for all
instruments presented for processing;
4.5 pay settlement fee to the
direct participating bank annually or as may be agreed by the parties;
4.6 make up any shortfall in the
clearing collateral before the commencement of the next settlement window in
the event of a shortfall or re-discount to bring the aggregate value of the
collateral up to the agreed minimum value as specified in the Settlement
Agreement or subsequent review of the collateral amount; and
4.7 undertake to bear the cost of
re-discounting the collateral necessitated by a need to recover the debit
balance in the Settlement Account.
5.0 Components of the Payments System
Indirect
participants may take part in any of the following payments operations:
a.
Cheque Clearing;
b.
EFT
& Bulk Payments;
c.
Instant Payments;
d.
Card
Issuance;
e.
Card
Transaction Acquiring (ATM, POS, Web,etc.);
f.
Portals
(e-Reference, Anti-Fraud, e-Signatory, e-Passport, etc.);
g.
Bank
Verification Number System; and
h.
Any
other component approved by the CBN.
Specific conditions applicable to indirect participants for the individual component are described below.
5.1 Cheque Clearing
Relevant provisions of the Nigeria Cheque Standards and the NBCS Rules shall apply.
5.2 EFT, Bulk Payments, and Instant Payments
5.2.1 An indirect participant shall provide
end-to-end electronic payment services to its customers, leveraging its
relationship with its direct participating bank and PSP.
5.2.2 An indirect participant shall process its
instruments through its direct participating bank or directly through the PSP.
5.2.3 A direct participating bank shall ensure
that its indirect participant(s) comply with the rules and regulations guiding
EFT operations.
5.2.4 All relevant provisions of the Regulation
on Instant (Inter-bank) Electronic Funds Transfer Services in Nigeria shall
apply.
5.2.5 Direct participating banks and indirect
participants shall provide necessary functionalities on deployed service
delivery channels to enable their customers to transfer and receive funds
seamlessly.
5.3 Card Issuance
5.3.1 Indirect participants may issue payment cards only on the authority of licensed payment card issuers.
5.3.2 The licensed payment card issuer shall be responsible for the operations of the indirect participants.
5.4
Card Transaction Acquiring (ATM,
PoS, Web, etc.)
5.4.1 Indirect participants may acquire payment card transactions only on the authority of licensed acquirers.
5.4.2 The licensed
acquirer shall be responsible for the operation of the indirect participant.
5.5.1
Electronic Reference System
(e-Reference)
5.5.1.1 An indirect participant shall process its e-References through its direct participating bank or directly through a PSP.
5.5.1.2 Where the indirect participant processes its e-References directly, the PSP shall clearly indicate source (bank, indirect participant) of the e- reference requests.
5.5.1.3 A receiving bank shall not discriminate between e-references originating from direct participating banks and indirect participant(s).
5.5.1.4 A direct
participating bank shall be responsible for the operations of its indirect
participant(s).
5.5.2 Bank Verification Number System
An indirect participant shall:
5.5.2.1 enroll its customers by itself, through a direct participating bank or a licensed Super-Agent.
5.5.2.2 process its validation and verification requests by itself or through a direct participating bank.
5.5.2.3 comply with the approved Regulatory Framework for BVN Operations and Watch-list for the Nigerian Banking Industry.
5.5.3 Others (Anti-Fraud, e-Signatory, e-Passport, etc.)
5.5.3.1 Indirect participants shall comply with all relevant Regulations relating to Anti-Fraud, e-Signatory, e-Passport and other relevant portals.
Any dispute between indirect participant and its direct participating bank shall be resolved according to the provisions of the Agreement between the parties. However, where a resolution could not be reached, such disputes shall be referred to the CBN for adjudication.
8.0 Amendments
Any amendment to this Regulation may be proposed by a stakeholder through a written request addressed to the Director, Payments System Management Department of the Central Bank of Nigeria.
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