ABUJA, Nigeria (VOICE OF NAIJA)-The Central Bank of Nigeria has directed banks, fintech companies and other payment service providers to store payment transaction data generated within the country on local servers starting from January 1, 2027, as part of new efforts to strengthen oversight of Nigeria’s expanding digital payments ecosystem.
The directive was contained in a circular issued on Monday by the Payments System Supervision Department of the CBN, and addressed to deposit money banks, microfinance banks, mobile money operators, switching and processing companies, payment terminal service providers, payment solution service providers, super agents and other licensed operators in the sector.
The circular, signed by the Director of the Payments System Supervision Department, Rakiya Yusuf, also introduced new market structure regulations, beneficial ownership disclosure requirements and enhanced systemic oversight measures for payment service operators.
According to the apex bank, the reforms became necessary due to the rapid expansion of electronic payments and digital financial services across the country.
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The CBN said it had observed “significant structural developments within the Nigerian Payments ecosystem, characterised by rapid growth in electronic payments, increasing adoption of digital financial services, and the emergence of operators with substantial market presence across key payment activities.”
It noted that while the growth has driven innovation, efficiency and financial inclusion, it has also raised concerns about market concentration, operational dependence, ownership transparency and the location of critical payments data.
To address these issues, the regulator mandated all financial institutions involved in payment processing in Nigeria to ensure that transaction data generated within the country is stored locally.
The circular stated, “All Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria.”
It added that “all affected Financial Institutions shall fully comply with this requirement effective January 1, 2027.”
The measure is expected to strengthen regulatory oversight, enhance data sovereignty and ensure that sensitive financial information remains within Nigeria’s jurisdiction, in line with global trends toward localisation of critical financial data.
Beyond data localisation, the CBN also directed financial institutions to disclose the ultimate beneficial ownership of significant shareholders.
According to the circular, institutions are required to maintain accurate and up-to-date records of their ultimate beneficial owners and make such information available to the apex bank when requested.
The regulator said the requirement must comply with existing anti-money laundering, counter-terrorism financing and counter-proliferation financing regulations.
It added that the directive builds on earlier efforts to improve ownership transparency and curb illicit financial flows within the system.
The CBN also introduced new competition rules aimed at reducing market dominance in the payments sector.
Under the framework, any institution controlling more than 25 per cent of the card-issuing market within a rolling 12-month period will not be allowed to hold more than 15 per cent of the merchant-acquiring market during the same period.
Similarly, operators with over 25 per cent share in merchant acquiring will be limited to a maximum of 15 per cent in card issuing activities.
Merchant acquiring refers to processing card payments on behalf of merchants, while card issuing involves providing payment cards to customers.
The CBN said all regulated entities must submit monthly market share reports based on prescribed templates and timelines, and comply fully with the market structure requirements by December 31, 2026.
The apex bank stated that the new measures are designed to “improve transparency through beneficial ownership disclosure, address concentration risk, promote a fair, competitive, and resilient payments ecosystem.”
It added that the reforms also aim to “safeguard the integrity of the Nigerian payments system and ensure the localisation of payments transaction data within Nigeria.”
The CBN warned that it would closely monitor compliance and impose sanctions where necessary.
“The CBN shall monitor compliance with the provisions of this Circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines,” the circular stated.
The directive comes amid rapid growth in Nigeria’s digital payments industry, with electronic transactions reaching record levels and regulators tightening oversight of banks, fintech firms and other operators to address operational, cybersecurity and systemic risks.