CBN Directs PoS Operators to Integrate Platforms with National Payment Switches

The Central Bank of Nigeria has directed all Point-of-Sale terminal providers to connect their operating systems to the Nigeria Inter-Bank Settlement System and the Unified Payment Services Limited as part of efforts to strengthen transaction transparency, improve payment system efficiency, and curb fraud within the digital payments ecosystem. The directive, reported by Punch and other Nigerian news outlets, forms part of the apex bank’s broader reforms aimed at deepening financial system oversight and enhancing the integrity of electronic payment channels.

According to the reports, the CBN issued the directive to ensure that all PoS transactions are routed through recognised national switching platforms, enabling better monitoring, faster settlement, and improved dispute resolution. The bank stressed that the integration is mandatory for all licensed PoS terminal service providers, including banks, fintech companies, and payment solution firms operating across the country.

The apex bank explained that connecting PoS systems to NIBSS and UPSL would allow regulators to have clearer visibility into transaction flows, helping to address longstanding concerns around transaction failures, delayed settlements, and untraceable transfers. With PoS terminals now accounting for a significant share of retail payments in Nigeria, the CBN said tighter integration is necessary to safeguard the stability of the payment system and protect consumers.

Reports indicate that the directive is also aimed at reducing fraud and other illicit financial activities associated with PoS operations. In recent years, authorities have raised concerns over the misuse of PoS terminals for money laundering, unauthorised cash withdrawals, and other financial crimes. By routing transactions through central switching platforms, the CBN believes suspicious activities can be detected more easily and addressed promptly.

Industry sources noted that the directive aligns with the CBN’s cashless policy and its drive to promote a more transparent and traceable payment environment. NIBSS and UPSL serve as critical infrastructure providers in Nigeria’s financial system, facilitating interbank transfers, card payments, and settlement services. Integrating PoS systems with these platforms is expected to standardise operations and improve interoperability across the payment landscape.

The reports further revealed that PoS service providers have been given timelines to comply with the directive, with penalties expected for operators that fail to integrate their systems within the stipulated period. The CBN emphasised that compliance is non-negotiable, noting that only fully integrated systems will be permitted to continue operating in the Nigerian market.

Payment service providers and fintech firms are expected to make technical adjustments to their platforms to meet the new requirements. Some operators have acknowledged that the integration process may involve additional costs and system upgrades, but many agree that the long-term benefits outweigh the short-term challenges. Industry stakeholders said improved settlement speed, reduced transaction disputes, and enhanced customer trust could ultimately boost transaction volumes and business growth.

Analysts observed that the directive comes at a time when PoS usage has expanded rapidly due to limited access to bank branches, increased digital adoption, and the rising popularity of agency banking. Millions of Nigerians now rely on PoS agents for cash withdrawals, transfers, bill payments, and other financial services, particularly in rural and underserved areas. As a result, the sector has become a critical component of financial inclusion efforts.

However, the rapid growth has also exposed regulatory gaps, prompting the CBN to introduce tighter controls. Analysts noted that connecting PoS terminals to national switches would help close loopholes that allow unlicensed operators to function outside regulatory oversight. It would also improve data accuracy, enabling regulators to make more informed policy decisions based on real-time transaction information.

Consumer advocacy groups welcomed the directive, saying it could help reduce the frequency of failed transactions and unresolved disputes that frustrate users. Many customers have complained about debited accounts without successful transactions, often facing delays in refunds. With transactions routed through NIBSS and UPSL, stakeholders believe accountability will improve and resolution timelines will shorten.

Banking sector experts also noted that the directive could enhance confidence in Nigeria’s digital payments ecosystem, particularly among international partners and investors. A more transparent and well-regulated payment system, they said, is essential for attracting investment and supporting innovation in the fintech space.

Despite the optimism, some PoS operators expressed concerns about implementation challenges, especially for smaller providers with limited technical capacity. They called for collaboration between regulators, switching companies, and service providers to ensure a smooth transition. Industry associations have reportedly begun engaging with NIBSS and UPSL to clarify technical standards and integration processes.

The CBN, according to reports, has assured stakeholders that it will provide guidance and support during the transition period. The bank emphasised that the objective is not to stifle innovation but to ensure that growth in digital payments occurs within a secure and transparent framework.

The directive is also seen as complementary to recent measures aimed at tightening oversight of cash-based transactions and promoting electronic payments. By strengthening infrastructure and regulatory supervision, the CBN hopes to reduce reliance on cash, improve tax compliance, and support broader economic formalisation.

As implementation begins, stakeholders will be watching closely to see how effectively the integration improves transaction efficiency and reduces operational challenges in the PoS segment. If successfully executed, analysts believe the move could mark a significant step forward in modernising Nigeria’s payment system and reinforcing trust in digital financial services.

Overall, the CBN’s order for PoS terminal providers to connect their systems to NIBSS and UPSL underscores the regulator’s determination to strengthen financial system oversight, enhance consumer protection, and ensure the continued stability of Nigeria’s rapidly evolving digital payments ecosystem.