Nigeria's central bank has stopped allowing offshore processing of payments. All banks, fintechs and payment operators must store transaction data locally by January 1, 2027.
The CBN issued the directive through its Payments System Supervision Department. Rakiya Yusuf, the department's director, signed the circular last week.
It applies to deposit money banks, microfinance banks, mobile money operators, switching companies and licensed payment service providers. Super agents and payment solution providers are also covered.
Local storage of payment data generated in Nigeria is now mandatory. All institutions must comply with Nigerian data protection laws in managing this information.
The regulator said rapid growth in digital payments prompted the move. Nigeria has become one of Africa's largest payment markets in recent years.
While expansion has boosted innovation and financial inclusion, concerns have grown. Market concentration, operational dependence and offshore data storage worried policymakers, according to the CBN.
"All Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria," the circular read.
Banks and fintechs relying on foreign cloud services face major changes. They'll need to shift operations before the 2027 deadline takes effect.
This policy mirrors a global trend among regulators. Countries worldwide are tightening control over financial data for cybersecurity and national security reasons.
Demand for local data centre capacity will likely surge. Financial institutions preparing for compliance will seek Nigerian alternatives for data storage.
Investment in local data centres has already accelerated over recent years. Operators have expanded facilities to serve banks, telecom firms, fintechs and government agencies.
The CBN's new requirement could drive even faster growth. Institutions scrambling for compliant solutions will fuel infrastructure development across the country.
Beyond data localisation, the apex bank strengthened oversight measures. Additional requirements now apply to the entire payments industry.
Financial institutions must maintain detailed records of ultimate beneficial owners. Banks and fintechs must provide this information to the CBN upon request.
Transparency in ownership structures became a key regulatory focus. These disclosure rules strengthen anti-money laundering and counter-financing efforts nationwide.
Industry observers expect significant operational adjustments in coming months. Institutions will need to evaluate their current infrastructure and compliance status.
Technical expertise in data management will become increasingly valuable. Local tech talent and solutions providers stand to benefit from the transition.
Compliance costs may initially burden smaller payment operators. However, building local capacity could create long-term competitive advantages for Nigerian firms.
The deadline leaves institutions roughly two years for preparation. CBN officials have signalled enforcement will begin immediately after January 2027.
