This article is presented in two parts. In this first part, the focus is on understanding the conceptual foundations of the Central Bank of Nigeria’s (“CBN”) new payments framework, including its possible implications for market structure and the emerging notion of functional separation within the payments ecosystem. It examines the key provisions of the circular, explores how “consumer issuing” and “merchant acquiring” activities might be interpreted, and highlights the critical question of market definition that underpins the framework’s application.
The CBN’s (“CBN”) recent circular introducing market structure restrictions within the payments ecosystem may represent one of the most significant regulatory interventions in the sector in recent years. While the circular also introduces data localisation and ultimate beneficial ownership disclosure requirements, among its most consequential features are the provisions restricting the extent to which a participant with significant market share in consumer issuing activities may also participate in merchant acquiring activities, and vice versa.
At first glance, the requirements appear relatively straightforward. Institutions with more than 25% market share in one segment may not exceed 15% market share in the other. However, beneath those thresholds lie a number of complex regulatory, commercial and competition-related questions that may ultimately determine the practical impact of the framework.
