The Central Bank of Nigeria has released the exposure draft for the regulatory requirements for non-bank merchants acquiring in Nigeria in furtherance of its mandate of enhancing the development of the electronic payment system in the country.
The regulator stated the requirements in its ‘Exposure draft of regulatory requirements for non-bank merchant acquiring in Nigeria’, to all Deposit Money Banks, mobile money operators, payment solution service providers, payment terminal service providers and other service providers.
“The objectives of this document are to establish non-bank acquiring as a regulated service and provide minimum standards and requirements for the operations of non-bank acquiring in Nigeria,” it said.
The draft stated that the participants in non-bank acquiring in the country were the acquiring banks, card schemes, and non-bank acquirer.
On the risk management side, it stated that non-bank acquirers would develop and provide an appropriate governance structure to manage the risk inherent in the acquiring service.
It added that there must be documented and approved policies in place, which support the risk management function and also highlight the acquiring programme strategy, including targeted merchant segments, various entities/agents involved, their responsibilities, likely risks and mitigation procedures.
The CBN stated that non-bank acquirers must have the ability to perform due diligence before on-boarding new merchants, adding that merchant history as well as checks against various databases, credit reports, personal and business financial statements, and income tax returns of the business and their owners to determine if there were previous fraud, litigation, AML and high chargeback, among others.
According to the draft, non-bank acquirers must have a process to ensure adequate merchant agreements are effected.
It stated that non-bank acquirer must maintain adequate risk controls to monitor merchant activity to ensure compliance with the card scheme rules and prevent undue harm to the acquirer, customers and the card scheme.
The CBN stated that it would terminate a non-bank acquirer’s licence based on failure to meet the conditions for renewal of the operating licence as a switch or TPP in Nigeria; dissolution of card association agreement; inability to maintain relationship with at least two card associations; operational failures that lead to significant losses/fraud; and any other reason(s) that might be determined by the apex bank from time to time.