Central Bank of Nigeria Introduces Fresh Guidelines for Contactless Payments

The Central Bank of Nigeria (CBN) has recently released new guidelines regarding contactless payments in the country. These guidelines, outlined in a circular signed by the Director of the Payments System Management Department, Musal Simon, aim to ensure that participants in contactless payments implement adequate risk management measures while adhering to relevant industry standards. The CBN's initiative reflects its commitment to standardizing operations in the payments system and promoting the use of innovative products while maintaining financial system stability.

Contactless Payments

Contactless payment, a method that enables financial transactions without physical contact between the payer and the acquiring devices, has emerged as an innovative and secure payment option. Recognizing its potential, the CBN emphasizes the need for all banks, financial institutions, and payment service providers to strictly comply with the newly issued guidelines.

Managing Risks through Transaction Limits

To mitigate the risks associated with contactless payments, the central bank has implemented transaction limits. The decision to impose limits on contactless payment amounts is a standard measure for fraud prevention. Evidence supports the effectiveness of such limits. According to data analytics company FICO, UK Finance reported a total of £574 million lost to card fraud in 2020, with only £16 million attributed to contactless payment fraud. Considering the £9.46 billion worth of contactless transactions during the same period, the fraud rate equates to only 1.8p per £100 spent using contactless technology.

Setting Limits: Ensuring Security and Accountability

In a subsequent circular (PSM/DIR/PUB/CIR/001/048), the CBN acknowledges the risks associated with contactless payments and establishes specific limits for transactions made through accounts or wallets. The new limits set the maximum transaction amount at N15,000, with a daily cumulative limit of N50,000. Transactions exceeding these limits will require additional verification and authorization to ensure the security and accountability of higher-value contactless payments.

With the issuance of these fresh guidelines, the Central Bank of Nigeria reinforces its commitment to promoting secure and efficient contactless payments. By setting transaction limits and emphasizing compliance among financial institutions, the CBN aims to strike a balance between encouraging innovation and safeguarding the integrity of the financial system. As the Nigerian payments landscape evolves, the implementation of these guidelines will contribute to the growth and stability of contactless payment methods in the country.

To Read the Full CBN Guidelines For Contactless Payments in Nigeria, Click Here