If you’ve used a USSD code to perform transactions on your mobile device, then you’re at least a one-time consumer of the Mobile Payment Regulatory Framework in Nigeria.
Mobile Payment Regulatory Framework in Nigeria
Nigeria’s mobile payment regulatory framework is a system of policies and actionable steps. Its core purpose is to enhance the delivery of mobile payment services across the country. By developing this critical infrastructure, the Central Bank of Nigeria (CBN) expects to democratise financial inclusion.
This outlines a long-term goal that does two things. One is to encourage the public to engage with digital products and services. You can say that such activities will build digital literacy among the Along with this will come reduced dependence on cash for everyday transactions.
Objectives of the Mobile Payment Regulatory Framework
You can think up several objectives of the mobile payment regulatory framework. However, from the official document, a total of four objectives are identified. They include:
- Determination of roles and responsibilities for all identified participants and shareholders.
- Stipulation of minimum requirements for both technical and business operations as they relate to mobile payments.
- Determination of the process flow between mobile payment operators, customers or businesses utilising the services, and other stakeholders or regulatory bodies.
- Provision of a suitable environment for the achievement of the overall objectives.
Mobile Payment Regulatory Framework Participants
Before diving into this topic, you must realise what role you play in this regulatory framework. This understanding is important for two reasons. First, it will keep you informed of your responsibilities towards the success of the framework. You surely want to contribute your quota - whether as a customer or mobile payment service provider.
Next, finding out the type of participant you are will guide your relationship with other stakeholders. A good example is that participants who are customers will be able to identify service providers and approach them accordingly.
The five types of participants in this framework are:
1. Scheme Operators
Scheme operators play a huge role in the mobile payment regulatory framework. They are responsible for designing the scheme w
2. Settlement Infrastructure Operators
This participant is responsible for settlement services, including exchanging messages, switching, and settlement.
3. Service Operators
Service operators rely on the activities of scheme operators to provide mobile payment services to consumers.
4. Solution Providers
Solution providers are responsible for creating and maintaining software products. These products and other software accessories and solutions make it possible for consumers to make mobile payments.
4. Consumers
Consumers are the real-world users of mobile payment services. They are everyday individuals, farmers, market women, and business people of all classes who make use of their mobile devices for payment.
The consumer makes up a vital part of the mobile payment regulatory framework. This is because they make use of the available payment services and, in turn, offer feedback. Their feedback serves as a guide for service improvement and quality assessment.
Payment Scenarios Covered in the Mobile Payment Regulatory Framework
A total of three payment scenarios are covered in the mobile payment regulatory framework in Nigeria. Below, we analyse what each of these scenarios are and when they apply.
Card Account-Based
The card account-based scenario idealises an instance where a payment card is linked to a mobile device. Various types of payment cards including credit, debit, and prepaid cards can be applied. Nevertheless, cards used must comply with existing regulations, be recognizable among financial institutions, and pass other security standards.
Bank Account Based
In the bank account-based scenario, a bank account is used to process payment. This account is linked to a mobile device and used for each transaction.
Bank accounts involved in mobile payment are required to have been generated by a recognized bank. Furthermore, these accounts are required to be in the right standing with existing regulations. All account types from current to savings and domiciliary accounts are accepted in this scenario.
Stored Value Account-Based
A stored value account-based scenario idealises an on-system method for processing mobile payments. In this scenario, all user details and unique identifiers are stored within the payments system.
The settlement process in this type of account is more complex compared to the others. It involves a deposit-taking institution holding actual funds on behalf of the stored value account users. The funds held must correspond to the total amount of funds available in stored value accounts across an entire scheme.
Stored value accounts available under the framework are the re-loadable stored value accounts and the prepaid accounts.
How Mobile Payment is Processed Under the Regulatory Framework
The modalities for operation under the mobile payment regulatory framework in Nigeria are as follows:
Registration: Scheme operators and service providers will collaborate to ensure that registration of all users takes place. This registration must include Know Your Customer (KYC) and other due diligence.
Activation: Registered users will proceed to activate their accounts using a PIN or password. Activation indicates readiness to transact using one of the three accounts/scenarios listed above.
Transactions: Transactions will be securely processed by critical members of the framework. Each transaction will contain the amount, name of the merchant and other necessary details.
Settlement: Scheme operators and solution providers will work together to ensure accurate and final settlement. The record of each settlement is maintained by the scheme for a minimum period of five years.
Conclusion
The mobile payment regulatory framework provides an overview and a functional approach to the operation of mobile payments. It is an encompassing system responsible for the success of mobile payments across Nigeria.