On the 8th of July 2021, the Central Bank of Nigeria ("CBN") issued a Supervisory Framework for Payment Service Banks ("the Framework") to strengthen their financial inclusion, ensure adequate consumer protection and streamline their day-to-day operations with a view to promoting transparency in their activities.

Prior to the Framework, the CBN issued its Guidelines for the Licensing and Regulation of Payment Service Banks (PSBs) in 2018 (revised 2020) with a view to ensuring that 80% of adults eligible to hold bank accounts in Nigeria have access to financial services by the end of 2020. The revised Guidelines aims at ensuring that PSBs leverage on mobile and digital services to boost access to financial services for low-income earners and the unbanked segments of the population. The key objective of the PSBs is to enable high-volume, low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment, particularly in the rural areas.

This article highlights significant provisions in the Framework.


The Framework brought regulatory changes to PSBs' landscape, especially as it relates to corporate governance, risk management practices and the safety of funds. Some of the key provisions in the Framework are:

Corporate Governance

In order to ensure a sound corporate governance culture, the Framework provides that all PSBs shall adopt structures and practices that will protect the interest of all stakeholders.1 To achieve such culture, the Framework recommends the appropriate board structure, composition for the purpose of the appointment to the Board and the schedules of the Board for the purpose of meetings.

In addition, all PSBs are required to comply with the provisions of the Assessment Criteria for Approved Persons' Regime, which clearly stipulates the roles, responsibilities, minimum qualifications and year of experience for principal officers of PSBs.2

Know Your Customer (KYC) and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

The Framework provides that PSBs should ensure that their systems are not used for money laundering and financing of terrorism. Hence, they should comply with the CBN's provisions on AML/CFT in Banks and other Financial Institutions in Nigeria and other extant laws on money laundering and terrorism.3

The institutional policy framework provided by the CBN on AML/CFT requires that PSBs adopt certain policies stating its commitment to comply and prevent any transaction that will facilitate criminal activity,4 formulate and implement internal controls to deter criminals from using its facilities for money laundering and terrorism,5 adopt a risk-based approach in the identification and management of AML/CFT risks,6 conduct and enhance due diligence on all business accounts7 and ensure that employees, agents and persons doing business with them understand the AML/CFT programme.8

Furthermore, the Framework states that PSBs should take appropriate steps in identifying, assessing and understanding their AML/CFT risks for customers and countries of operations,9 in order to control and mitigate the risks that has been identified (either by the country or by the PSBs).10 Flowing from this, the Framework mandates PSBs to designate a Compliance Officer with the relevant competence and authority and outline its duties as it relates to AML/CFT.11

In addition, the Framework provides three-tier KYC requirements to further deepen financial inclusion. Thus, the KYC standard shall be utilised to ensure application of flexible account opening requirements for low and medium value accounts which shall be subject to caps and restrictions as the amounts of transaction increase.12 These outlined requirements must be met at all times by customers of PSBs.

Shared Services

PSBs are required to enter into shared services agreement with its parent company or subsidiary provided that the recipient entity does not have the expertise and capacity to carry out these services. However, the prior approval of the CBN is made mandatory.13 They shall also submit their shared policies and procedures approved by the Board to the CBN,14 ensure that shared service fees are documented for all transactions between the service provider and the recipient15 and finally comply with all provisions of the Guidelines for Shared Services Arrangements for Banks and other Financial Institutions which shall be advised from time to time by the CBN.16 

Data Infrastructure & Cyber security 

The Framework states that PSBs shall comply with the provisions of the Nigerian Financial Services Industry IT Standard Blueprint, Risk Based Cyber Security Framework and other regulations the Bank may issue regarding ICT infrastructure for banks. More so, PSBs are required to put in place a Cybersecurity programme that shall meet the minimum requirement laid out in the Risk Based Cybersecurity Framework.17  

Monitoring & Evaluation

In order to ensure effective monitoring, implementation and enforcement of the provisions of the Framework, PSBs are required to render monthly returns which shall contain the number of financially excluded/unbanked customers on-boarded during the month and the number of access points deployed in the month, active access points and the cumulative access points deployed.18


The Framework and its policies for PSBs is a welcomed initiative in the financial sector, as PSBs are now accountable to the CBN in their operations. It is envisaged that the Framework will ensure transparency and boost access to financial services for low-income earners and the unbanked segments of the population.


1 Section 4.0 of the Framework.

2 Section 5.0 of the Framework; see Section 5.1 to 5.17 of the Framework.

3 Section 6.0 of the Framework.

4 Section 6.1 (d) (i) of the Framework.

5 Section 6.1 (d) (ii) of the Framework.

6 Section 6.1 (d) (iii) of the Framework.

7 Section 6.1 (d) (ix) of the Framework.

8 Section 6.1 (d) (x) of the Framework.

9 Section 6.1 (e) (i) of the Framework.

10 Section 6.1 (f) (i) of the Framework.

11 Section 6.1 (g) of the Framework.

12 Section 6.6 of the Framework.

13 Section 7.0 (i) of the Framework.

14 Section 7.0 (iii) of the Framework.

15 Section 7.0 (ix) of the Framework.

16 Section 7.0 (xii) of the Framework.

17 Section 9.0 of the Framework.

18 Section 15.0 of the Framework.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.