In a significant move to tighten oversight of Nigeria’s rapidly evolving payments landscape, the Central Bank of Nigeria (CBN) has issued a directive requiring all banks, fintech firms, and licensed payment providers to install GPS tracking technology on every Point of Sale (PoS) terminal. This initiative, according to regulatory officials, is aimed at bolstering security, tracking fraudulent activities, and improving the overall monitoring of electronic transactions nationwide.
TheNewsGuru.com reports that Rakiya Yusuf, director of the CBN’s payments system supervision department, confirmed that the newly announced regulation stipulates that every PoS device operating in Nigeria must come equipped with integrated geo-location features and dual-frequency GPS receivers to guarantee precise, real-time location data. Industry watchers say this move is intended to make transaction tracing more reliable and reduce financial crime.
As detailed in the circular dated August 25th, payment entities must now register each PoS terminal with an accredited payment terminal service aggregator, providing exact GPS coordinates for the merchant or agent’s operating location. The CBN explained that these measures are designed to improve the accountability of PoS transactions and curb misuse by unscrupulous actors.
Stricter Transaction Enforcement: How the New Policy Works
With immediate effect, every PoS device must verify and transmit its physical location at the moment a transaction begins. The CBN has introduced a security threshold: any PoS activity occurring beyond a 10-meter radius from the registered business location will trigger an automatic alert, pending investigation. In addition, terminals lacking proper geo-tagging will simply be unable to process payments, effectively deactivating them from the payment ecosystem. This, authorities believe, will help block fraudulent mobile agents and unauthorized usage.
According to the circular, existing PoS terminals have a 60-day grace period to implement geo-tagging. For new terminals entering the market, geo-tagging and registration are mandatory steps before certification and activation can be issued by the regulator. Failure to comply, experts warn, could lead to significant transaction disruptions for businesses that rely on these payment devices.
The statement reads: “Geo location data must be captured at transaction initiation and included in the transaction payload as a mandatory reporting field. Devices not directly routed to a Payment Terminal Service Aggregator (PTSA) are not permitted to transact.”
“All existing and newly registered terminals must strictly comply with the approved Merchant Category Code (MCC) for their specific sector.”
“All existing terminals must be geo-tagged within 60 days of this circular; new terminals, from now on, must be geo-tagged before certification and activation.”
PoS Boom in Nigeria: Opportunity and Challenge
The expanded regulation comes at a pivotal moment for Nigeria’s payment sector. The use of PoS devices, once a niche back-up for traditional cash payments, has exploded as banks reduce their branch networks and recurring ATM cash shortages drive customers toward agent-based services. According to recent data from the Nigeria Inter-Bank Settlement System (NIBSS), transactions via PoS terminals ballooned to over ₦6.4 trillion in 2023—reflecting the scale and importance of this payment channel.
However, security issues have grown alongside the popularity of PoS transactions. In interviews with Lagos-based shopkeepers and mobile agents, many acknowledged rising cases of fraud—ranging from cloned terminals to fake agents operating far from registered locations. A local payments expert, Bolaji Oni, told us: “Geo-tagging will help the authorities see where transactions are really happening and reduce criminal misuse. But there’s concern about costs and technological barriers, especially for small business owners in rural areas.”
- Risk Factors: According to police reports, some kidnappers have forced victims to transfer ransom payments through PoS agents to avoid detection, exploiting limits in transaction tracking.
- Fraud Trends: The Central Bank has received a mounting number of fraud complaints involving PoS-related scams, underscoring the need for tighter controls (CBN Annual Report 2023).
- SME Impact: For many small traders and roadside agents, the new compliance requirements may represent a challenge due to the cost of upgrading devices and securing reliable internet access for geo-verification.
New International Standards and Compliance Deadlines
In addition to GPS compliance, the CBN has ordered payment service providers to adopt the global ISO 20022 messaging standard by October 31st. The ISO 20022 format, developed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), is designed to improve transaction accuracy, boost data interoperability, and make digital payments safer—both domestically and internationally. Failure to transition to this standard could leave providers unable to process cross-border or high-value local transfers efficiently.
The new regulations state: “All payment transaction messages exchanged domestically or internationally must be formatted in accordance with ISO 20022, as specified by CBN and SWIFT guidelines.”
- Data Requirements: Payment institutions are required to ensure that each transaction includes complete and accurate details—such as payer and payee identifiers, merchant/agent details, and transaction metadata.
- Timeline: All in-scope institutions must complete their conversion to ISO 20022 and be fully compliant by October 31, with compliance checks beginning from October 20, as per official CBN notifications.
Technical upgrades are also mandatory: all PoS devices must run on Android version 10 or above, to be eligible for integration with the National Central Switch, which will manage geofencing and data verification.
Local Reactions and Sector Perspectives
While industry analysts largely back the regulatory intent, several grassroots stakeholders have raised questions about the feasibility of rapid implementation. Sarah Uzoamaka, a PoS agent in Enugu, expressed concern: “Most of us bought our machines before these rules. Upgrading will cost money, and without support we may lose customers.” Her concerns reflect widespread anxieties among Nigeria’s micro, small, and medium enterprises (MSMEs), who make up the bulk of PoS operators, particularly in less urbanized states.
By contrast, some digital payment companies view the changes as necessary for long-term sector growth. “A standardized, traceable PoS framework will give international partners and investors greater confidence in Nigeria’s fintech ecosystem,” said Dayo Musa, a technology risk consultant based in Lagos. Similar regulatory steps have been taken in Kenya and South Africa, where authorities implemented location tracking and transaction monitoring protocols to fight mobile money fraud with mixed results.
Implications for West Africa and Beyond
Nigeria’s move to fortify its PoS sector could set a precedent across West Africa, especially as neighboring Ghana, Côte d’Ivoire, and Senegal face similar payment security challenges. Ghana’s own central bank, for instance, has begun reviewing how mobile money agents are tracked, in response to increasing fraud risks. As the digital economy grows across the continent, regional harmonization of payment regulations may become a future priority, experts suggest.
Looking to the future, payments experts recommend that authorities combine robust regulation with training, financial support, and public education. As Dr. Chinedu Ebere, a lecturer at the University of Ibadan’s Department of Economics, puts it: “Policies that work on paper can struggle on the ground unless there’s adequate support for implementation. The CBN should ensure agents—especially in rural communities—are not excluded from the formal system due to a lack of resources or awareness.”
Enforcement, Monitoring, and Future Trends
The CBN has made it clear that compliance inspections will begin on October 20, a full eleven days before the final compliance deadline for ISO 20022 formatting. Penalties for non-compliance may include disconnection of non-compliant devices, blacklisting of service providers, and possible license suspension—a stance echoed in past regulatory interventions such as the crackdown on unlicensed Bureaux De Change operations.
While these measures may cause short-term disruption, proponents argue the long-term benefits could shape a safer, more efficient payments industry, encourage investment, and boost public trust in digital financial services throughout Nigeria and the West African region. As payment technologies continue to evolve, experts stress the importance of adaptable regulation and inclusive financial policy-making, ensuring digital growth does not leave small traders or vulnerable communities behind.
The ongoing transformation of Nigeria’s PoS landscape presents both opportunities and challenges. With strong implementation, engagement with local stakeholders, and technical innovation, Nigeria is positioned to lead West Africa in building a safer, more transparent, and globally integrated digital payments ecosystem.
What do you think about the Central Bank’s new PoS tracking rules? How will these changes affect you or your business? Drop your thoughts in the comments below, and don’t forget to follow us for the latest updates on Nigeria’s digital economy and fintech reforms.
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