The Central Bank of Nigeria (CBN) has introduced new measures aimed at curbing market concentration in the country’s payments ecosystem, including limits on the market share operators can hold across card issuing and merchant acquiring services.
Card issuing refers to the provision of payment cards to
customers, while merchant acquiring involves processing card payments on behalf
of businesses.
In a circular signed by Rakiya Yusuf, director of the
payments system supervision department, on Monday, the apex bank said the
measures are aimed at addressing concerns over market concentration,
operational dependence, systemic importance and the localisation of payment
transaction data.
The CBN said rapid growth in electronic payments and digital
financial services has increased the market presence of some operators, raising
concerns about competition and resilience in the sector.
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“Accordingly, the CBN hereby issues this Circular to improve
transparency through beneficial ownership disclosure, address concentration
risk, promote a fair, competitive, and resilient payments ecosystem,” CBN said.
“The Circular further aims to safeguard the integrity of the
Nigerian payments system and ensure the localisation of payments transaction
data within Nigeria.”
Under the new framework, the regulator said any financial
institution controlling more than 25 percent of the card issuing market would
be restricted in its participation in merchant acquiring services
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“Any licensed financial institution engaged in card issuing
activities, whether individually or part of a group of related entities, that
holds more than twenty-five percent (25%) market share in card issuing within
any rolling twelve-month period shall not hold more than fifteen percent (15%)
market share in merchant acquiring activities during the same period,” the
regulator said.
“Any licensed Financial Institution engaged in merchant
acquiring activities, whether individually or as part of group of related
entities, that holds more than twenty-five percent (25%) market share in
merchants acquiring activities within any rolling twelve-month period shall not
hold more than fifteen percent (15%) market share in card issuing activities
during the same period.”
This is one of many changes the regulator has been
implementing in the financial industry, as the CBN released an exposure draft
of the revised guidelines for the licensing and regulation of financial holding
companies (FHCs/HoldCos) in Nigeria on June 10.
In the draft, the CBN proposed the HoldCos of banks hold
shares in subsidiaries instead of the lender’s and also capped the stake at 51
percent.
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