CBN Moves to Tighten Grip on Digital Payments, Orders Banks, Fintechs to Keep Nigerians’ Transaction Data at Home.

CBN Moves to Tighten Grip on Digital Payments, Orders Banks, Fintechs to Keep Nigerians’ Transaction Data at Home.

New rules target data sovereignty, market dominance, and transparency in booming fintech sector

The Central Bank of Nigeria (CBN) has unveiled sweeping new regulations aimed at reshaping the country’s rapidly expanding digital payments industry, directing banks, fintech companies, and all payment service operators to store Nigerians’ transaction data on local servers from January 1, 2027.

The move, which marks one of the most significant regulatory overhauls in Nigeria’s financial technology space in recent years, is designed to strengthen regulatory oversight, improve data security, curb excessive market dominance, and ensure critical financial information remains within the country’s jurisdiction.

The directive was contained in a circular issued on Monday by the CBN’s Payments System Supervision Department and signed by its Director, Rakiya Yusuf.

It was addressed to deposit money banks, microfinance banks, mobile money operators, switching and processing firms, payment terminal service providers, payment solution service providers, super agents, and all other licensed operators in the Nigerian payments ecosystem.

Why CBN Is Tightening Control

According to the apex bank, the decision became necessary following the explosive growth of electronic payments and digital financial services across Nigeria over the past few years.

The CBN noted that while innovation in the sector has significantly improved financial inclusion, convenience, and payment efficiency, the rapid growth has also exposed critical vulnerabilities capable of threatening the stability and integrity of the financial system.

The regulator stated that it had observed “significant structural developments within the Nigerian payments ecosystem,” driven by the increasing adoption of digital financial services and the emergence of powerful operators dominating key payment segments.

The apex bank warned that these developments have raised serious concerns over market concentration, operational dependence, transparency of ownership structures, and the handling of sensitive financial data generated by Nigerians.

Payment Data Must Stay in Nigeria

Under the new regulation, all financial institutions and payment operators processing transactions within Nigeria must ensure that payment transaction data generated in the country are stored and managed locally.

The circular stated:

«“All financial institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria.”»

The CBN added that all affected institutions are expected to achieve full compliance with the directive by January 1, 2027.

Industry analysts believe the policy is part of broader efforts to strengthen Nigeria’s digital sovereignty, reduce reliance on foreign infrastructure, and improve the ability of regulators to monitor financial transactions in real time.

The move also aligns Nigeria with a growing global trend where governments are increasingly demanding that critical financial and consumer data be stored within national borders to enhance cybersecurity and national economic security.

Experts say the directive could trigger massive investments in local data centres and cloud infrastructure as banks and fintech firms race to meet the deadline.

Fintechs, Banks Face Fresh Ownership Transparency Rules

Beyond data localisation, the apex bank also introduced stricter transparency requirements aimed at exposing the true owners of financial institutions operating in the payments sector.

Under the new framework, banks, fintech companies, and payment service operators will now be required to maintain accurate and up-to-date records of their ultimate beneficial owners.

The CBN explained that institutions must disclose the identities of individuals who ultimately own or control significant shareholdings and make such information available to the regulator upon request.

According to the circular, the disclosure requirements must comply with existing anti-money laundering, counter-terrorism financing, and counter-proliferation financing regulations.

The new rule is expected to strengthen efforts to combat illicit financial flows, shell companies, hidden ownership structures, and financial crimes within Nigeria’s financial ecosystem.

CBN Targets Market Dominance in Payments Industry

In another major shift, the apex bank introduced fresh competition rules designed to prevent a few operators from dominating the fast-growing payments market.

Under the new framework, any institution controlling more than 25 per cent of Nigeria’s card-issuing market over a rolling 12-month period will be prohibited from holding more than 15 per cent of the merchant-acquiring market during the same period.

Likewise, operators with over 25 per cent market share in merchant-acquiring activities will be restricted to a maximum of 15 per cent market share in card-issuing operations.

Merchant acquiring involves processing card payments on behalf of businesses and merchants, while card issuing refers to the provision of debit, credit, or prepaid cards to customers.

The CBN said the restrictions are intended to reduce concentration risk, encourage healthy competition, and prevent monopolistic practices capable of undermining innovation and financial system stability.

To ensure effective monitoring, the apex bank directed all regulated entities to submit monthly market share reports using templates and timelines prescribed by the regulator.

Affected institutions have until December 31, 2026, to fully comply with the new market structure requirements.

Stronger Oversight and Tough Sanctions

The CBN warned that it would closely monitor compliance with the new rules and impose sanctions on institutions that fail to comply.

According to the circular:

«“The CBN shall monitor compliance with the provisions of this Circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines.”»

Analysts say the latest measures signal the regulator’s determination to tighten supervision over Nigeria’s booming digital finance sector amid rising concerns over cybersecurity threats, operational risks, and the growing influence of large fintech operators.

Nigeria’s Digital Payments Boom

Nigeria’s digital payments industry has witnessed explosive growth in recent years, driven by increased smartphone penetration, internet access, agency banking expansion, and growing adoption of mobile and online banking services.

Electronic transactions have continued to hit record levels as millions of Nigerians increasingly rely on digital platforms for transfers, bill payments, online shopping, and other financial activities.

The sector’s rapid expansion has also intensified competition among banks, fintech startups, mobile money operators, and payment processors seeking larger shares of the country’s lucrative digital economy.

However, regulators have repeatedly raised concerns over cybersecurity vulnerabilities, systemic risks, data protection, fraud, and the growing concentration of market power among a handful of operators.

With the latest directive, the CBN appears poised to assert greater control over the sector while pushing for a more transparent, competitive, and resilient payments ecosystem capable of supporting Nigeria’s long-term digital economy ambitions.