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The Central Bank of Nigeria (CBN) has directed banks, fintech companies, and other payment service providers to store all payment transaction data generated within Nigeria on local servers, effective January 1, 2027.
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The directive forms part of a new regulatory framework aimed at strengthening oversight, improving transparency, and safeguarding Nigeria’s rapidly expanding digital payments ecosystem.
CBN Circular Signals Shift Toward Data Localisation
The directive was issued in a circular dated June 15, 2026, 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 companies, payment terminal service providers, payment solution service providers, super agents, and other licensed payment operators.
According to the apex bank, the policy responds to “significant structural developments within the Nigerian payments ecosystem,” driven by rapid growth in electronic payments, expanding digital financial services, and the emergence of dominant market players.
Who Is Affected by the New Directive
The data localisation requirement applies broadly across Nigeria’s payments value chain, including:
- Deposit money banks
- Microfinance banks
- Mobile money operators
- Switching and processing companies
- Payment terminal and solution service providers
- Super agents and other licensed payment operators
All affected institutions must ensure that payment transaction data generated within Nigeria is stored and managed locally, in compliance with Nigerian data protection laws and regulations.
Why the CBN Is Mandating Local Data Storage
The CBN said that while growth in digital payments has driven innovation, efficiency, and financial inclusion, it has also raised concerns around:
- Offshore storage of sensitive payment data
- Market concentration and operational dependence
- Ownership transparency
- Regulatory visibility and enforcement
To address these risks, the regulator is ending the practice of offshore payment processing for Nigeria-generated transactions, strengthening data sovereignty and ensuring that critical financial data remains under Nigerian jurisdiction.
Ultimate Beneficial Ownership Disclosure Introduced
Beyond data localisation, the circular introduces stricter Ultimate Beneficial Ownership (UBO) disclosure requirements.
Banks and payment service providers are now required to:
- Maintain accurate and up-to-date records of their ultimate beneficial owners
- Disclose significant shareholders to the CBN upon request
- Comply fully with existing anti-money laundering (AML), counter-terrorism financing (CTF), and counter-proliferation financing regulations
The measure builds on the CBN’s broader efforts to combat illicit financial flows and enhance transparency across the financial system.
New Competition Rules to Curb Market Dominance
The CBN also unveiled new market structure rules designed to prevent excessive concentration in the payments industry:
- Any institution controlling over 25% of the card-issuing market within a rolling 12-month period will be restricted to a maximum of 15% of the merchant-acquiring market during the same period.
- Similarly, operators with over 25% market share in merchant acquiring will be limited to 15% market share in card issuing.
Merchant acquiring involves processing card payments for merchants, while card issuing relates to providing payment cards to customers.
Compliance Timelines and Reporting Obligations
Under the new framework:
- Monthly market share returns must be submitted by regulated entities using CBN-prescribed templates.
- Institutions must fully comply with market structure requirements by December 31, 2026.
- Data localisation requirements take effect from January 1, 2027.
The CBN warned that it would closely monitor compliance and impose supervisory sanctions where necessary.
Strengthening Nigeria’s Payments System
According to the CBN, the reforms are designed to:
- Improve transparency through ownership disclosure
- Reduce concentration risk in the payments market
- Promote fair competition and systemic resilience
- Safeguard the integrity of Nigeria’s digital payments infrastructure
- Reinforce national data sovereignty
The directive comes amid record growth in electronic transactions in Nigeria, as regulators intensify oversight to address operational, cybersecurity, and systemic risks in the digital financial services sector.
