Regulatory Update: Insights from CBN's “Migration to ISO 20022 Standard for Payment Messaging and Mandatory Geo-Tagging of Payment Terminals” Circular

On August 25, 2025, Nigeria's apex bank, the Central Bank of Nigeria (CBN) issued a directs Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Mobile Money Operators (MMOs), Switching and Processing Companies, Payment Terminal Service Providers (PTSPs), Payment Solution Service Providers (PSSPs), Super Agents, and other licensed operators to:

• Ensure that that their payment messaging systems complies with the ISO 20022, which is now the global benchmarkS, and 

• Geo-tag every Point-of-Sale (POS) machine in Nigeria 

What is ISO 2022?

The new ISO 20022 messaging standard is a global language for financial transactions, replacing older systems with a modern, data-rich format. This allows for more detailed information, like payer and payee identifiers, to be included in messages. 

The new ISO 20022 standard achieves these through detailed information and details between financial systems including the full, structured address of the sender and receiver, multiple invoice numbers, the purpose of the payment and details about the final beneficiary. 

Why is CBN Mandating this? 

The apex bank noted that fraudulent practices by rogue POS operators and the abuse of payment devices have created vulnerabilities that demand tighter surveillance, making standardised messaging critical to restoring confidence in the retail payment system. The measure, while aligning the domestic financial system with international standards, is also aimed at curbing rising fraud cases across Nigeria’s electronic payments landscape.

What is POS Geotagging?

The mandatory geo-tagging of payment terminals uses GPS to link devices to their precise physical location. This measure enables the Central Bank of Nigeria (CBN) to monitor the deployment of Point of Sale (PoS) machines, combat fraud by preventing their use in unauthorized locations, and identify areas lacking payment services to promote financial inclusion. Institutions are also required to ensure an accurate population of mandatory data elements, including payer and payee identifiers, merchant and agent identifiers, and transaction metadata.

This implies that a Point of Sale (PoS) terminal is placed at a specific location on the map, identifying the exact spot using longitude and latitude. With these coordinates, one can accurately locate where the PoS is situated, and where each transaction is to be conducted.

So imagine a situation where a POS agent is registered to a particular location. The implications of this new directive is that the POS terminal cannot be operated outside a ten metre radius of the location it is located to. This helps curb fraud perpetrated through POS terminals, as it helps pinpoint the location where each transaction is conducted, and aids tracking of erring agents in case of suspicious activity of fraud. 

Why is CBN Mandating this? 

The CBN's new PoS geo-tagging rule is a counter-terrorism effort aimed at stopping fraudsters who have been scamming people through PoS channels. Under the new regulations, all PoS terminals must be connected to one of two licensed payment companies: NIBSS or Unified Payment Services Limited. Banks must send all PoS transactions through these companies, while payment processors have to integrate with both. The CBN has given a 60-day window for existing terminals to comply, with a final deadline of October 31, 2025.

Intended Effect of these policies

Error Reduction - With these new directives, there are now more avenues for efficient supervision and monitoring of financial transactions, which reduces the margins of risk in the operation of payment systems. With compliance with the ISO 20022’s standard for payment messaging, systems can now interact with detailed financial information, and ensure that individuals conducting transactions are properly specified and monitored. This move also aids efficient transition into Nigeria's open banking policy drive, ensuring that customer data is transmitted efficiently in line with international standards.

Fraud Detection - POS geo-tagging ensures that the country's fraud detection mechanisms are boosted and strengthened, as it allows for real-time updates and tracking of financial transactions. This moves aids financial institutions to be able to file suspicious transactions reports as soon as detected, with adequate information and details of the transacting parties fully supplied. It also boosts the drive towards combating AML/CFT, as it ensures that fraud through POS terminals are adequately tracked and monitored.

For instance, The National Bureau of Statistics (NBS) estimated that the average amount paid as ransom for kidnapping was N2.7 million per incident, with an estimated total ransom of N2.2 trillion paid within the reference period. These are often conducted via untracked payment methods. Through the CBN’s new directive, payment infrastructures are boosted with tracking capabilities that allow crime watchdogs and financial institutions to detect and fight fraud in real time. 

Improved Regulatory Oversight - The new directive ensures that players in the payments sector are subject to enhanced regulatory oversight, thereby ensuring customer protection, regulatory compliance and curb the proliferation of unfair practices. It also ensures that transactions are conducted in ascertainable conditions, with full disclosure of details of transacting parties. This move further allows the apex bank to further police and effect policies to upscale and strengthen financial institutions, with positive economic consequences.

Conclusion

These policies feed into the broader AML, fraud prevention and regulatory reporting obligation of financial institutions in Nigeria, and Regfyl's platform offers a comprehensive solution that can help financial institutions navigate the complexities of the ever changing compliance landscape in Nigeria.

Book a 15-minute discovery call to see how Regfyl can strengthen your compliance posture and position your institution for long-term success.