How CBN’s regulatory reforms have transformed Nigeria’s instant payment system

By Ayobami Oyalowo

IN the past decade, Nigeria has emerged as a continental leader in digital payments, boasting one of the most dynamic and fastest-growing instant payment systems in the world. At the core of this transformation is the Central Bank of Nigeria’s (CBN) forward-looking regulatory strategy, especially its Payments System Vision 2025 (PSV2025) which build on the gains of earlier frameworks like PSV2020 the foundation for speed, security, innovation, and inclusion in the nation’s financial ecosystem. At a bankers’ forum in November 2024, the Central Bank Governor Olayemi Cardoso highlighted that PSV2025 aims to further drive cross-border payments, advance open banking, and expand the regulatory sandbox. The growth of Nigeria’s NIBSS Instant Payment (NIP) platform is an undisputed success. In 2020, it processed ₦10.3 trillion in monthly transactions. By mid-2024, monthly values had surged to over ₦89.5 trillion. Over the course of 2024, the system handled over ₦1.07 quadrillion in total transactions, reflecting a 79.6% year-on-year increase from ₦600 trillion in 2023. Monthly transaction volumes grew from just over 111 million in 2020 to 969 million by July 2024. This rapid progress has been enabled by a blend of targeted regulation, technological upgrades, and an inclusive policy framework.

Financial inclusion by design: A key pillar of CBN’s regulatory focus has been deliberate financial inclusion. Despite the progress in digital payments, the financial access gap remains significant, with over 38 million Nigerian adults still unbanked as of 2023 (EFInA data). PSV2025 sets out to close this gap by accelerating access to basic financial services through agent banking, mobile money, and cost-efficient digital solutions. The CBN’s support for USSD-based services, for example, has been instrumental in reaching underserved populations. USSD remains the dominant channel for financial access in rural communities due to its compatibility with basic mobile phones. PSV2025 encourages deeper collaboration with the Nigerian Communications Commission (NCC) to reduce USSD service costs, making mobile financial services more affordable.

Regulatory sandbox: enabling innovation with oversight: To support innovation while maintaining consumer protection and market integrity, the CBN introduced a Regulatory Sandbox Framework in 2021. The sandbox allows licensed financial technology companies (fintechs), startups, and even traditional banks to test new products in a controlled environment, under the supervision of regulators. The PSV2025 reiterates the importance of the sandbox as a testing ground for innovations in areas such as digital lending, biometric payments, API-based services, and blockchain applications. It ensures that risk is minimized while promising technologies are evaluated for scalability, compliance, and alignment with national goals such as financial inclusion and cyber-resilience. So far, dozens of participants have passed through the sandbox phase, providing input that has helped shape updated guidelines on payments, security, and customer protection. The sandbox is part of a broader commitment to collaborative regulation—where the CBN acts not only as a regulator, but also as a co-innovator with industry players.

Open banking framework: unlocking data for smarter finance

A central plank of the PSV2025 strategy is the development of a comprehensive Open Banking Framework, modelled after the European Union’s PSD2 regulation. Under this regime, banks and financial institutions are required to securely share customer-permissioned data with licensed third parties—including fintechs—via standardized Application Programming Interfaces (APIs). This policy is designed to encourage innovation, interoperability, and competition. It allows customers to access tailored financial services across different platforms while giving innovators the tools to build payment apps, budgeting tools, and lending solutions that can plug into the banking infrastructure. In early 2023, the CBN issued the *Operational Guidelines for Open Banking in Nigeria, outlining data sharing tiers, consent protocols, and minimum technical standards. It also established the Open Banking Registry (OBR) a central repository for API providers and data consumers to be verified.

The Open Banking initiative is expected to: deepen customer choice and convenience, enhance credit access via alternative credit scoring models and support personalized financial planning tools, and strengthen fintech-bank partnerships. The CBN’s transformative role in shaping the digital payments space demonstrates a commitment to proactive and principled regulation. As the eNaira continues to evolve, and as open banking and AI-enabled fraud detection mature, Nigeria’s instant payment system will become even more inclusive, transparent, and efficient.

•Oyalowo, a development economist, can be reached on x (formerly Twitter) @AyoOyalowo

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