On the 25th May 2021, the Central Bank of Nigeria (CBN) issued a circular to financial institutions notifying them of the release of the Regulatory Framework for Non-Bank Acquiring in Nigeria (the "Framework"). The Framework identifies companies that can be licensed to carry out acquiring activities as well as the requirements for obtaining CBN approval. It also sets out the minimum standard of operations for Non-Bank Acquiring in Nigeria.

The Framework is designed to complement the CBN Guidelines on Operations of Electronic Payment Channels in Nigeria (Guidelines) as the roles of participants in the provision of non-bank acquiring services are prescribed in the Guidelines. This article describes in summary, requirements for non-bank merchant acquiring as well as the Framework's requirements for the approval of companies to conduct non-bank merchant acquiring activities in Nigeria.

Who is a Merchant Acquirer?

A Merchant Acquirer is an institution responsible for processing and settling credit and debit card transactions on behalf of a merchant or a business. Merchant Acquirers play an integral role in electronic payment transactions processing as they enable merchants to accept card payments by acting as a link between merchants and card schemes such as Visa, Verve, MasterCard e.t.c. Merchant Acquirers typically perform functions such as transactions authorization, processing and settlement of electronic payment transactions.

Who can perform Non- Bank Acquiring Services?

The Framework permits only companies operating with Switching and Processing Licenses issued by the CBN or any other company as approved by the CBN to carry out merchant acquiring services on behalf of merchants. Non-Bank Merchant Acquirers are also required to execute agreements with their proposed merchants and payment schemes whose transactions they wish to acquire, prior to commencement of business.

What are the Requirements for Regulatory Approval of Non-Bank Merchant Acquirers?

To obtain approval from the CBN to carry out non-bank merchant acquiring services, an applicant must submit the following to the CBN.

  1. Evidence of engagement with a card scheme;
  2. Evidence of due diligence and merchant onboarding process;
  3. A merchant risk monitoring framework;
  4. A sponsorship letter from a settlement bank;
  5. A draft Merchant Agreement;
  6. Details of its settlement arrangements;
  7. Service Level Agreement with a settlement bank;
  8. A Business Continuity Plan; and
  9. Any other documents required by the CBN.

In addition, the CBN is empowered to terminate the Non-Bank Acquirer's approval in any of the following instances (i) upon failure of the company to meet the conditions for the renewal of its operating license as a switching and processing company (ii) termination of its agreement with payment schemes; (iii) inability to maintain its relationship with at least 2 payment schemes; (iv) operational failure leading to significant losses or fraud; and (v) other reasons as may be determined by the CBN from time to time.

What are the Settlement Arrangement Obligations of Non-Bank Merchant Acquirers?

The Framework expressly precludes Non-Bank Acquirers from directly accessing or holding merchant's funds whether from or for settlement reversals or any other reason. Non-Bank Acquirers are required to stipulate their responsibilities to merchants with respect to the security and settlement of transaction amounts to merchants' accounts. They are also required to ensure that merchants' accounts are credited in respect of acquired transactions, as agreed in executed Service Level Agreements (SLAs). Non-Bank Acquirers are also required to comply with respective card scheme rules in the performance of their obligations.

Please note that Non-Bank Acquirers are required to comply with all applicable security standards and are to ensure that all merchants who store, transmit and use sensitive card data are Payment Card Industry Data Security Standard (PCI DSS) certified. Also, Non-Bank Acquirers are prohibited from acquiring transactions of merchants that are not registered in Nigeria.


The introduction of the Framework that regulates Non-Bank Acquirers is a commendable effort by the CBN to facilitate the development of electronic payment systems in Nigeria. It is expected that this framework will ensure the protection of merchants and help to guarantee secure and seamless electronic payment transactions in Nigeria.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.