Introduction

The Central Bank of Nigeria (CBN), on 9, July 2021, issued The Regulatory Framework and Guidelines for Mobile Money Services in Nigeria ("The Framework") which is essentially a more robust framework in comparison to the Guidelines on Mobile Money Services in Nigeria ("The 2015 Guidelines") issued in 2015. The purpose of the Framework, according to the CBN, is to promote financial inclusion within the country.

The emergence and dominance of mobile money operators (MMOs) in Nigeria has simplified financial transactions for the average citizen through the operation of mobile phones. Therefore, walking into the banking hall is no longer necessary. These factors have made it necessary for the CBN to create an enabling environment for mobile money services in Nigeria, primarily geared towards achieving availability, acceptance, and usage of mobile payment services and systems nationwide.

Scope of the Framework

The Framework provides coverage of the entire mobile money ecosystem which includes the Regulators, MMOs, Infrastructure Providers, Other Service Providers, Consumers, and Mobile Money Agents. Notwithstanding, the Framework provides for two categories of Mobile Money Services for operation in Nigeria. These are;

a.The Bank-led Model: This model is characterised by a bank, either acting alone or with a consortium of banks, with or without other approved organizations, seeking to deliver banking services via a mobile payments system while acting as the lead initiator.

b.The Non-bank led Model: This model is characterised by the lead initiator being a corporate organization that has been specifically licensed by the CBN to deliver mobile money services to customers.

Notably, The Telco-led model, where a Mobile Network Operator is the lead initiator has not been sanctioned by the Framework. This is in contrast with the provisions of the Guidelines which give recognition to this model. This exclusion, according to the CBN, has been made to provide the apex bank with full control over monetary policy operations, minimise risks and ensure that the offerings of financial services are driven only by organizations within the CBN's regulatory purview.

Notable Provisions

Savings Wallet: MMOs are permitted, subject to obtaining a no "objection letter" from the CBN to offer savings wallet services for unbanked citizens in Nigeria. The modalities for the operation of a savings wallet are clearly defined and these include; a requirement for a Savings Wallet Principal Pool Account, and a Savings Wallet Interest Pool Account. Other rules on the operation of mobile wallets include specifications on charges, minimum balance, savings periods, the procedure for determination of interest payable to subscribers, disclosure requirements for MMOs, automation of interest distribution, and the proportion to be retained by an MMO where applicable.

Permissible and Non-Permissible Activities: The Framework clearly spells out activities that are permissible and those which are prohibited for MMOs. Amongst permissible activities include; wallet creation and management, electronic money issuance, agent recruitment and management, pool account management, non-bank acquiring, and card acquiring. On the other hand, MMOs are prohibited from granting any form of loans, advances, and guarantees (directly or indirectly), issuing insurance, or accepting foreign deposits.

Transaction Limits: Know Your Customer (KYC) requirements have been incorporated into the Guidelines as there are now three types of transactions namely; customers at KYC tier 1 can transact to a daily limit of N50,000 with a daily cumulative transaction limit of N300,000 while customers with KYC tier 2 have a daily cumulative transaction limit of N200,000 and a cumulative balance limit of N500,000 and KYC tier 3 may transact daily to a limit of N5,000,000 with no applicable limits to their account balance.1

Consumer Protection and Sanctions: MMOs are required to resolve all customer complaints within 48 hours2, ensure customers understand the transactions they enter and make adequate disclosures to customers3, provide mechanisms to mitigate against a loss of service, fraud, and customer information, ensure proper communication channels are put in place, and the Nigeria Deposit Insurance Corporation (NDIC) is also mandated to provide insurance for mobile money deposit wallet subscribers.4 Where a Deposit Money Bank (DMB) acting as a settlement bank fails/defaults, customers of the MMO enjoy a maximum coverage of up to N500,000.

The CBN also bears the responsibility of facilitating the assumption of the deposit liability of a failed MMO, in which instance the subscriber's funds in the pool account shall be transferred to the MMO appointed to assume liability. In addition, the CBN may impose financial penalties against an MMO, its board of directors, officers, or agents, withhold corporate approvals, suspend defaulters from mobile money operation or even revoke a defaulter's mobile money operation license.

Conclusion: A robust mobile money system is an essential aspect of any modern economy. Over the years, mobile money has continued to play an important role in the promotion of financial inclusion in Nigeria. The standard of living of a significant number of previously unbanked citizens has been improved as more families are able to save and manage cash flows. Mobile money reduces the need to handle raw cash and promotes commercial transactions by a significant number of citizens in the "lower to the middle class". The CBN's formulation of policies and rules governing this sector is therefore a step in the right direction for financial inclusion in the Nigerian economy as a holistic application of the Framework will ensure a smoother operation of the Mobile Money Sector in Nigeria.

Footnotes

1 See Central Bank of Nigeria three-tier Know Your Customer requirements https://www.cbn.gov.ng/out/2013/ccd/3%20tiered%20kyc%20requirements.pdf Accessed on the 14 July 2021

2 Section 18 (f) of the Framework and Guidelines on Mobile Money Services in Nigeria

3 Section 18.0 of the Framework and Guidelines on Mobile Money Services in Nigeria

4 Section 10.1.1 of the Framework and Guidelines on Mobile Money Services in Nigeria

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