In response to the potential risks associated with contactless payments, the Central Bank of Nigeria (CBN) has introduced transaction limits that require verification and authorization for higher-value transactions. The CBN issued guidelines on contactless payments and outlined the restrictions to safeguard the financial system.
Effective immediately, the transaction limit for contactless payments has been set at N15,000, with a daily cumulative limit of N50,000. Transactions exceeding these limits will require verification and authorization to proceed. The CBN emphasized that existing Know Your Customer (KYC) requirements and limits on electronic payment channels will apply to such transactions.
The announcement was made in a circular dated June 27, 2023, signed by Musa Jimoh, the Director of the Payment System Management Department at the CBN. The circular was addressed to banks, Other Financial Institutions, and Payment Service Providers to ensure widespread implementation of the guidelines.
To carry out contactless payments exceeding the stipulated limits, contact-based technology must be utilized. This measure aims to strike a balance between convenience and security, providing a standardized approach to contactless payments while maintaining financial system stability.
Contactless payment is a technology-driven payment method that allows financial transactions to be conducted without physical contact between the payer and the acquiring devices. It offers a safe and efficient option for low-value and large-volume payments, reducing the need for physical exchange of cash.
Various payment instruments are compatible with contactless payment, including pre-paid debit and credit cards, stickers, fobs, wearable devices, tokens, and mobile electronic devices. These instruments facilitate easy, convenient, and efficient cashless transactions.
The CBN’s framework ensures that participants in contactless payments implement robust risk management processes and adhere to relevant standards. Contactless-enabled payment terminals interact with contactless payment devices to facilitate seamless transactions.
Stakeholders in the payment system are required to comply with the provisions outlined in the guidelines and the relevant regulations of the CBN. Failure to adhere to these provisions may result in appropriate sanctions and penalties determined by the bank.