The Central Bank of Nigeria (CBN) has issued a new directive mandating all licensed payment operators—including Deposit Money Banks (DMBs), Microfinance Banks, Mobile Money Operators, Payment Terminal Service Providers (PTSPs), and Super Agents—to comply with the ISO 20022 standard for payment messaging. In addition, all Point-of-Sale (POS) terminals in the country must now have geo-tagging capabilities with strict compliance deadlines. While the move is aimed at enhancing Nigeria’s payments infrastructure and aligning with global standards, it introduces both opportunities and challenges for POS terminal operators.
The Key Issues
1. ISO 20022 Compliance
The CBN has reiterated that all payment messages—whether domestic or international—must be formatted in line with ISO 20022 specifications. This means payment operators must standardize transaction data such as payer and payee identifiers, merchant and agent details, and transaction metadata. Operators are required to fully migrate and achieve compliance by October 31, 2025.
For POS operators, this translates to system and software upgrades to ensure terminals can generate and transmit payment messages in ISO 20022 format. It also requires working closely with Payment Terminal Service Aggregators (PTSAs) and acquirers to align with new certification processes.
2. Mandatory Geo-Tagging of POS Terminals
Perhaps the most immediate impact for POS operators is the mandatory geo-location requirement. According to the circular, all existing and newly deployed payment terminals must be equipped with double-frequency GPS receivers for reliable geolocation. This geo-tagging process requires each terminal to be registered with a PTSA, with accurate latitude and longitude coordinates of the merchant or agent’s place of business.
In practice, this means POS operators must ensure that all deployed devices have location-tracking capabilities and integrate with the National Central Switch SDK for geolocation monitoring and geofencing.
3. Tighter Geofencing Controls
To combat fraud and improve transaction traceability, the CBN has specified that POS terminals will only be permitted to operate within a 10-meter radius of their registered business location. Any attempt to initiate a transaction outside this permitted geofence will be flagged.
This restriction directly impacts mobile POS agents who often move between locations to serve customers. Agents will now need to operate strictly within their registered business premises, limiting flexibility but strengthening compliance and monitoring.
4. Certification and Terminal Standards
All POS terminals and applications must be certified by the National Central Switch. The certification process will ensure that terminals are compliant with ISO 20022 messaging and the CBN’s geolocation monitoring requirements. Additionally, the CBN has mandated that all POS devices run on a minimum Android Operating System (OS V10) to support seamless integration with the National Central Switch SDK.
For POS operators, this implies that older devices running outdated operating systems may become obsolete. Investments in new terminals or software upgrades will be necessary to remain compliant.
5. Strict Compliance Timelines
The CBN has given operators 60 days from the date of the circular (August 25, 2025) to geo-tag all existing terminals. Newly registered terminals must be geo-tagged before certification and activation. Furthermore, compliance validation exercises by the CBN will begin on October 20, 2025.
This tight timeline increases pressure on POS operators, especially those managing large networks of agents. Non-compliance could result in terminals being deactivated or operators facing regulatory sanctions.
Implications for POS Operators
- Higher Compliance Costs: Operators will incur costs in upgrading POS devices, integrating SDKs, and ensuring ISO 20022 compatibility.
- Reduced Agent Mobility: With a 10-metre geofence restriction, roaming POS agents will no longer be able to move across locations to serve customers, potentially reducing transaction volumes in underserved areas.
- Operational Disruptions: The need to re-register and geo-tag thousands of terminals within 60 days may overwhelm operators, leading to disruptions in service delivery.
- Increased Transparency and Security: While challenging, the move enhances trust in Nigeria’s payment system by improving transaction traceability, reducing fraud, and ensuring data standardization.
- Market Consolidation: Smaller operators unable to meet the cost and technical requirements may be forced out of the market, leading to consolidation around larger PTSPs and MMOs with stronger compliance capacity.
Conclusion
The CBN’s mandate on ISO 20022 migration and mandatory POS geo-tagging represents a significant shift in Nigeria’s payment ecosystem. For POS terminal operators, the reforms demand immediate investments in technology upgrades, stricter compliance processes, and changes to operational models. While the short-term impact may include higher costs and reduced flexibility, the long-term benefits lie in creating a more secure, transparent, and globally aligned payments infrastructure.
For operators, success will hinge on how quickly they adapt—balancing compliance requirements with innovative strategies to continue serving Nigeria’s growing demand for cashless payments.
