+POS Registration to Curb 18% of Payment Frauds

Cybersecurity Levy: 5 Entities Concerned 

The Central Bank of Nigeria (CBN) has directed banks to start deducting a 0.5% cybersecurity levy on all electronic transfers from 5 types of entities.

The new directive to impose a new levy for all electronic money transfers has sparked public outrage following the announcement on Monday, May 6, 2024, that banks operating in the country should start charging a cybersecurity levy on transactions.

However, this levy does not concern individuals and businesses except those specified in Schedule 2 of the Cybercrime (Prohibition, Prevention, Etc.) (amended) 2024 Act.

These 5 business entities are;

• GSM Service providers and all telecommunication companies;
• Internet Service Providers;
• Banks and other Financial Institutions;
• Insurance Companies;
• Nigerian Stock Exchange

According to the CBN, the levy is intended to implement the funding arrangement stipulated in the Cybercrime Act, which requires the Office of the National Security Adviser to receive funds for preventing and detecting cybercrimes in Nigeria. 

According to the Central Bank of Nigeria, all these transactions by individuals and businesses are exempted from the cybersecurity levy:

• Loan disbursements and repayments
• Salary payments
• Intra-account transfers within the same bank or between different banks for the same customer
• Intra-bank transfers between customers of the same bank
• Other Financial Institutions instructions to their correspondent banks
• Interbank placements
• Banks’ transfers to CBN and vice-versa
• Inter-branch transfers within a bank
• Cheque clearing and settlements
• Letters of Credits
• Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts
• Savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers.
• Government Social Welfare Programmes transactions e.g. Pension payments
• Non-profit and charitable transactions, including donations to registered non-profit organisations or charities
• Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions
• Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.

POS Registration to Curb 18% of Payment Frauds

The Corporate Affairs Commission (CAC) has instructed banks to ensure the registration of their customers in the agent banking platform on or before July 7, 2024.

“The Central Bank of Nigeria (CBN) had earlier, through a memo issued on April 30, 2024, directed all non-individuals on the Agent Banking Authorisation to immediately take steps to register their businesses with the CAC in line with Section 863 of the Companies and Allied Matters Act (CAMA) 2020,” the CAC informed.

This directive aims to safeguard businesses and regulate the agent banking industry against recent fraudulent transactions linked to certain POS terminals.

Point-of-sale terminals are e-payment systems that provide alternative financial services to people outside the traditional banking system and automated teller machines (ATMs).

In the last 11 years, the number of transactions processed through POS terminals in Nigeria has significantly increased from 2.6 million total transactions in 2012 to 3.8 billion in 2022.

POS transactions consistently increased over this period, except for a slight drop in 2020 during the pandemic, which later rebounded in 2021 through 2022.

Similarly, the number of POS terminals registered in Nigeria increased by 61% in the past 15 months, from 2.3 million terminals in January 2023 to 3.7 million in March 2024.

This trend indicates a potential growth in electronic payment adoption and a growing preference for POS’s alternative financial services.

In the last 3 years, the number of transactions through POS has increased as much as Internet Transfers, making it the second most used payment option in Nigeria.