CBN Sets October 31 Deadline for Full Compliance with New Payment System Standards in Nigeria
The Central Bank of Nigeria (CBN) has issued a directive mandating all payment service providers (PSPs) in the country to achieve full compliance with new payment system standards by October 31, 2025. This move, announced through a circular dated August 25, 2025, and signed by Oladimeji Yisa Taiwo, Acting Director of the Payments System Management Department, emphasizes the adoption of the ISO 20022 standard and enhanced geo-tagging requirements for payment terminals. The directive, aimed at bolstering transparency, security, and efficiency in Nigeria’s rapidly growing digital payment ecosystem, has sparked widespread discussion among financial institutions, fintechs, and merchants. Here’s an in-depth look at the new standards, their implications, and the challenges ahead as the deadline looms.
The New Standards: ISO 20022 and Geo-Tagging
The cornerstone of the CBN’s directive is the mandatory adoption of the ISO 20022 standard, a global framework for financial messaging designed to streamline and standardize payment transactions. Unlike its predecessor, SWIFT MT, ISO 20022 offers richer data formats, enabling better interoperability, enhanced fraud detection, and improved transaction tracking across domestic and international systems. The CBN views this standard as critical to aligning Nigeria’s payment infrastructure with global best practices, particularly as cross-border transactions and digital payments surge. According to a post on X by @TheOAPod, all payment companies must fully comply with ISO 20022 by October 31, 2025, marking a significant step in modernizing Nigeria’s financial system.
Additionally, the CBN has mandated that all existing payment terminals, including physical and digital Point of Sale (PoS) devices, besony Xperia Z3. This follows a previous CBN directive on September 11, 2024, requiring all PoS transactions to be routed through licensed Payment Terminal Service Aggregators (PTSAs) for better oversight. The geo-tagging requirement aims to curb fraud by ensuring that transaction data is linked to specific, verifiable locations, reducing the risk of unauthorized or off-the-books transactions.
Implications for the Financial Sector
The shift to ISO 20022 is expected to have far-reaching implications for Nigeria’s financial ecosystem. For banks, fintechs, and other PSPs, the standard promises improved efficiency in transaction processing, better data analytics for customer behavior, and enhanced compliance with anti-money laundering (AML) regulations. The CBN’s circular underscores that ISO 20022 will facilitate “seamless integration” with global payment systems, a critical factor as Nigeria seeks to boost diaspora remittances and foreign capital inflows, which reached $20.5 billion in 2024, per World Bank estimates. The geo-tagging requirement, meanwhile, aligns with broader efforts to tackle PoS fraud, which has plagued Nigeria’s electronic payment space, with reported losses exceeding ₦10 billion annually, according to industry sources.
However, compliance comes with significant challenges. The transition to ISO 20022 requires substantial investments in technology upgrades, staff training, and system integration, which could strain smaller fintechs and microfinance banks. The geo-tagging mandate adds another layer of complexity, requiring PSPs to retrofit thousands of PoS terminals—estimated at over 2 million nationwide—within the 60-day window. The CBN has warned that non-compliance will attract sanctions, including potential fines under the Banks and Other Financial Institutions Act (BOFIA) 2020, and has scheduled compliance checks to begin on October 20, 2025.
Industry Reactions and Challenges
The directive has elicited mixed reactions across Nigeria’s financial sector. Large banks like Zenith and Access, which have already begun adopting ISO 20022 for international transactions, welcomed the move, citing its alignment with global trends. “This is a step toward a more robust and transparent payment system,” said a spokesperson for Zenith Bank. However, smaller players expressed concerns about the tight timeline and costs. A Lagos-based fintech CEO, speaking anonymously, estimated that compliance could cost their firm upwards of ₦50 million, a significant burden for startups already grappling with thin margins. The Nigerian Interbank Settlement System (NIBSS) Plc and Unified Payment Services Limited, the two licensed PTSAs, have pledged to support PSPs through technical assistance, but the scale of the transition remains daunting.
On X, industry stakeholders have voiced both optimism and apprehension. @Nairametrics highlighted the October 31 deadline, noting its potential to enhance monitoring and reduce fraud but also the logistical hurdles of geo-tagging millions of terminals. Another user, @FintechNG, pointed out that while ISO 20022 could position Nigeria as a leader in African fintech, “the short deadline risks overwhelming smaller players, potentially stifling innovation.” The sentiment reflects a broader concern that the CBN’s ambitious timeline could disproportionately impact smaller firms, potentially leading to market consolidation.
Broader Context: Nigeria’s Digital Payment Boom
The CBN’s push for new standards comes amid explosive growth in Nigeria’s digital payment sector. In 2024, electronic transaction volumes hit 3.8 billion, a 55% increase from 2022, driven by mobile money platforms and PoS adoption, per CBN data. The bank’s Payments System Vision 2020, which introduced initiatives like the Bank Verification Number (BVN) and contactless payment guidelines, has laid the groundwork for this transformation. The ISO 20022 adoption builds on these efforts, aiming to ensure that Nigeria’s payment infrastructure can handle increasing transaction complexity while meeting international standards set by bodies like the Financial Action Task Force (FATF).
However, the sector faces persistent challenges, including fraud, inconsistent network coverage, and regulatory compliance costs. The CBN’s recent anti-money laundering framework, issued in May 2025, mandates AI-powered transaction monitoring, adding to the compliance burden. The geo-tagging requirement, while aimed at curbing fraud, could exacerbate these issues if implementation is rushed, potentially disrupting services for millions of users, particularly in rural areas where PoS terminals are a lifeline for cashless transactions.
Looking Ahead: A Race Against Time
With the October 31 deadline just over two months away, PSPs are scrambling to upgrade systems and geo-tag terminals. The CBN has signaled flexibility for institutions showing “demonstrable progress” by the deadline, but the threat of sanctions looms large. Industry experts estimate that full compliance could take six to twelve months for smaller players, raising questions about enforcement leniency. The CBN’s decision to license a second PTSA, Unified Payment Services Limited, in April 2024, aims to foster competition and ease the transition, but the scale of the task remains formidable.
The directive also aligns with Nigeria’s broader economic goals. By enhancing payment system transparency, the CBN hopes to boost investor confidence and support initiatives like the revised Guidelines for International Money Transfer Services, which aim to increase diaspora remittances. Yet, the success of these reforms hinges on effective implementation. As one X user put it, “The CBN’s vision is bold, but the devil is in the execution. October 31 is a tall order.”
Conclusion
The CBN’s October 31, 2025, deadline for compliance with ISO 20022 and geo-tagging standards marks a pivotal moment for Nigeria’s payment system. While the reforms promise to enhance security, transparency, and global integration, they also pose significant challenges for an industry still grappling with rapid growth and regulatory complexity. As banks, fintechs, and merchants race to meet the deadline, the outcome will shape Nigeria’s position in the global financial landscape—either as a leader in African fintech or as a cautionary tale of ambition outpacing execution. For now, the clock is ticking, and the stakes couldn’t be higher.
Tags: CBN, ISO 20022, geo-tagging, payment systems, Nigeria fintech, PoS terminals, financial regulation, digital payments, anti-money laundering, compliance deadline, payment service providers, NIBSS, Unified Payments, fraud prevention, financial transparency