CBN Reviews Limits on Contactless Transactions

The Central Bank of Nigeria recently established a policy limiting contactless payments. The announcement came on Tuesday in two circulars signed by Musa Jimoh, Director of the CBN's Payments System Management Department. This policy is coming just after the CBN requested all banks to get the social media handles of all their customers.

The first circular which the CBN released covers the issue of contactless payment standards for banks, other financial institutions, and payment service providers.

The Central Bank of Nigeria developed the Guidelines for Contactless Payments in Nigeria as part of its attempts to simplify operations in the payments system while supporting the deployment of new products and preserving financial system stability.

Contactless payment, which involves the completion of financial transactions without physical contact between the payer and the acquiring devices, has been identified as an innovative payment option for the safe and efficient processing of low-value and high-volume payments.

The Guidelines were designed to guarantee that contactless payment participants adopt suitable risk management procedures and methods while adhering to the highest relevant requirements.

The CBN stated that all banks, other financial institutions, and payment service providers must strictly adhere to the Guidelines.

The CBN stated in the second circular that contactless payments using accounts/wallets in Nigeria have a transaction limit of N15,000. It went on to say that there is a daily cumulative restriction of N50,000.

“Following the issuance of the Guidelines on Contactless Payments in Nigeria, and in recognition of the risks associated with contactless payments, the bank hereby defines transaction limits above which verification and authorisation are required," the circular stated.

The apex bank stated that transactions above the daily limit will need proper verification and permission.

Higher-value contactless payments are transactions that exceed the above-mentioned limits and require appropriate verification and authorisation, it said. Existing KYC procedures and constraints on electronic payment channels will apply to these transactions.

Limits above the daily cumulative limit should be enforced using contact-based technologies.