The CBN Gives Payment Service Banks Permission To Sell Dollar

The Central Bank of Nigeria (CBN) published a supervisory framework for payment service banks yesterday (PSB). The framework allowed PSB operators to sell foreign currencies, particularly dollars, to authorised foreign exchange dealers, among other things.

The PSBs were also given permission by the CBN to accept deposits from people and small businesses that would be covered by the deposit insurance system, as well as to conduct payments and remittances (including inbound cross-border personal remittances) through various channels within Nigeria.

According to the framework, operators are expected to use technology to deliver services that are easily accessible to the unbanked people and those living in remote areas of the country.

The framework focuses on corporate governance, PSB risk management, and the security of funds for Payment Service Banks’ customers.

This Framework also strives to ensure that PSBs’ activities are based on appropriate risk management procedures.

PSBs must follow existing regulations as well as the CBN’s prudential recommendations and circulars, which are issued on a regular basis.

PSBs are to target financially excluded people primarily in rural areas and unbanked places, according to the CBN, with at least 25% financial service contact points in such rural areas as defined by the CBN from time to time.

They plan to form direct relationships with card scheme operators. Such cards will not be eligible for foreign currency transactions; nonetheless, they will be able to use ATMs in some of these places, as well as Point of Sale devices and banking agents.

PSBs can also establish coordinating centres in clusters of outlets to supervise and control the activities of the various financial service touch points and banking agents, with the CBN’s prior approval. They can also use other channels, such as electronic platforms, to reach out to their customers.

The CBN also authorized the PSBs to accept deposits from individuals and small businesses that will be covered by the deposit insurance scheme; conduct payments and remittances (including inbound cross-border personal remittances) through various channels within Nigeria; and sell foreign currencies realized from inbound cross-border personal remittances to authorized foreign exchange dealers.

The PSBs can also issue debit and pre-paid cards in the CBN’s name, manage an electronic wallet, provide financial advice, and invest in Federal Government of Nigeria and CBN assets, according to the CBN.

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