CBN Moves to Prevent Banks’ Exposure on e-Payment Solutions

The Central Bank of Nigeria (CBN) said it has observed the growing exposure of banks on payment solutions service providers’ (PSSPs) platform, due to operational failures.

Therefore, in furtherance of its responsibility for effective oversight of the payment system, and the need to address the issue, the banking sector regulator in a circular on the “Prevention of Exposures to Banks through Payment Solution,” signed by the Director, Banking and Payment System Department, Mr. Dipo Fatokun, directed that all banks and payment solution service provider, for the purpose of payments under the Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria, should give values to customers after settlement at T+1.

It however pointed out that there are exceptions that would necessitate instant value to customers where the paying organisation and/or sending banks pledge collateral against their transactions, for which they require instant value to customers

“The payment solution service provider’s scheme operates a scheme collateral arrangement, which is adequate to offset irrecoverable exposures in the event of any shortfall of such collateral arrangement, the shortfall be borne by the payment solution service provider. All payment solution providers should ensure implementation of adequate system exceptions monitoring tools, including alerts, to aid banks in detecting anomalies that could lead to exposures.

“All payment solution service providers shall jointly determine with participating banks, ICT resource capacity planning for banks’ transaction levels. In addition, banks and PSSPs shall endure that their systems are not overstretched by the level of transactions being supported, by providing necessary headroom for all critical ICT resource used in facilitating payment services,” a copy of the circular which was posted on the central bank’s website explained.