Exclusive: CBN Aims for Six-Month Timeline for PoS Terminal Recertification to Combat Fraud

The Central Bank of Nigeria (CBN) is planning to recertify all active Point of Sale (POS) terminals across the country, according to two sources familiar with the conversation who spoke to TechCabal. As part of this process, there will be updates to issuing Terminal Identification Numbers (TID), which are unique eight-digit identifiers. Additionally, POS agents will be required to provide information such as their Bank Verification Number (BVN) and tax identification numbers.

"This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant," one person familiar with the CBN’s plans said.

Previously, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly. However, recertification will require acquirers (banks and mobile money operators) to register each TID separately. Registration involves providing an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank.

The validation of a POS terminal delivered to a particular location will be handled by licensed Payment Terminal Service Providers (PTSPs) such as Interswitch, ETOP, or CitiServe. Banks will usually select and map each terminal registration with a specific PTSP, which sets it up, deploys it, and provides ongoing support to the merchant. PTSPs also serve as the intermediary for terminal procurement from the OEM, as banks/acquirers are not allowed to engage directly with OEMs for procurement," explained a product manager at a fintech startup.

The Central Bank of Nigeria (CBN) has not provided a specific timeline for the commencement of the recertification exercise, but TechCabal has learned that the Nigerian Interbank Settlement System (NIBSS) was instructed by the CBN to develop a geofencing plan. This plan aims to ensure that terminals are not used outside the locations where they are registered. Once certified, POS terminals can only be used in the specific location where they are deployed. If a POS terminal is used outside of its registered address or location, NIBSS will disable it.

The timeline for the recertification process remains unclear, but mobile money agents will be required to provide additional information as part of their Know Your Customer (KYC) requirements to operate Tier-3 accounts. These Tier-3 accounts allow for transactions of up to ₦1 million, and customers can hold deposits of up to ₦1 billion.

Previously, agents were allowed to operate any level of tiered accounts as long as proper KYC procedures were followed and necessary documentation was obtained. Tier-1 accounts were the most popular among agents because they required minimal documentation to open and operate. However, the recertification process is expected to push agents towards operating more Tier-3 accounts, given the increased requirements and benefits associated with them.

In addition to the recertification of POS terminals, the plan includes the audit of agents and a review of their processes by acquirer banks, Super Agents, and Mobile Money Operators (MMOs). This is intended to ensure alignment with the proposed recertification program and other ongoing initiatives.

Mobile money operators, speaking anonymously to TechCabal, have expressed the need for further clarification on certain aspects of the certification exercise for POS terminals.