CBN Mandates Banks, Fintechs to Host Payment Data Locally
The Central Bank of Nigeria (CBN) has directed banks, fintech firms, and other payment service providers to store payment transaction data generated within the country on local servers from January 1, 2027, as part of new measures to strengthen oversight of the fast-growing digital payments ecosystem.
The directive was contained in a circular issued by the CBN’s Payments System Supervision Department on Monday 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 payments industry.
The circular, signed by the Director of the Payments System Supervision Department, Rakiya Yusuf, also introduced new market structure rules, beneficial ownership disclosure requirements and systemic oversight measures for payment service operators.
According to the apex bank, the reforms became necessary following the rapid expansion of electronic payments and digital financial services across the country.
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 had improved innovation, efficiency and financial inclusion, it had also created concerns around market concentration, operational dependence, ownership transparency and the storage of critical payments data.
To address these concerns, the regulator ordered all financial institutions facilitating payments in Nigeria to ensure that transaction data generated within the country are stored domestically.
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 move is expected to strengthen regulatory oversight, enhance data sovereignty and ensure that sensitive payment information remains within Nigeria’s jurisdiction.
It also aligns with broader efforts by regulators globally to localise critical financial data and reduce reliance on offshore infrastructure.
Beyond data localisation, the CBN ordered banks, payment service providers and other financial institutions with digital payment operations to disclose the ultimate beneficial ownership of significant shareholders.
According to the circular, institutions must maintain accurate and up-to-date records of their ultimate beneficial owners and make such information available to the apex bank upon request.
The regulator said the disclosure requirement must comply with existing anti-money laundering, counter-terrorism financing and counter-proliferation financing regulations.
The directive builds on previous CBN efforts to strengthen beneficial ownership transparency as part of wider measures to combat money laundering and illicit financial flows in the financial system.
The central bank also introduced fresh competition rules aimed at limiting excessive market dominance in the payments industry.
Under the new framework, any financial institution that controls more than 25 per cent of the card-issuing market in 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 more than 25 per cent market share in merchant acquiring activities will be restricted to a maximum of 15 per cent market share 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 would be required to submit monthly market share returns based on prescribed templates and timelines.
It further directed affected institutions to take the necessary measures to achieve full compliance with the market structure requirements by December 31, 2026.
The apex bank said the new measures were designed to “improve transparency through beneficial ownership disclosure, address concentration risk, promote a fair, competitive, and resilient payments ecosystem.”
According to the regulator, the reforms are also intended 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 latest directive comes amid a rapid expansion of Nigeria’s digital payments industry, with electronic transactions reaching record levels and regulators increasing oversight of banks, fintech firms and other payment operators to address operational, cybersecurity and systemic risks. CBN to Open N1trn Worth of Treasury Bills for Subscription
