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To Mitigate Related Risks, CBN Sets Limits for Contactless Payment Transactions

Following the issuance of guidelines on contactless payments in the country, the Central Bank of Nigeria (CBN) yesterday announced transaction limits above which verification and authorisation are required.

The central bank explained that the restrictions were put in place in view of the risks associated with contactless payment.

As a result, the bank said the transaction limit for the payment innovation would be N15,000 while the daily cumulative limit was set at N50,000.

The apex bank disclosed this in a circular dated June 27, 2023, which was signed by CBN Director, Payment System Management Department, Mr. Musa Jimoh, that was addressed to banks and Other Financial Institutions and Payment Service Providers.

The CBN further disclosed that higher-value contactless payments – transactions that exceeded the stipulated limits – would require verification and authorisation to complete.

The bank added that for such transactions exceeding the limits, existing KYC requirements and limits on electronics payment channels shall apply.

It stated that limits above the stipulated daily cumulation shall be conducted through contact-based technology.

Also, the CBN said the guidelines was in furtherance of its efforts to standardise operations in the payment system while encouraging the deployment of innovative products and sustaining financial system stability.

Essentially, contactless payment involves the consummation of financial transactions without physical contact between the payer and the acquiring devices and had been identified as an innovative payment option for the safe and efficient conduct of low-value and large-volume payments.

The innovation enables an alternative payment method whereby payment instruments were used without physical contact with devices.

The technology provides easy, convenient, and efficient cashless options for users.

The central bank also listed examples of contactless payment instruments including pre-paid, debit and credit cards, stickers, fobs, wearable devices, tokens, and mobile electronic devices.

According to the bank, the framework was conceived to ensure that participants in contactless payments implement appropriate risk management processes and measures while keeping to the best relevant standards.

Contactless-enabled payment terminals interact with contactless payment devices to facilitate payments.

The framework, however, mandated stakeholders to comply with the provisions of the guidelines and relevant regulations of the bank.

The CBN, among other things, warned that non-adherence to these provisions shall attract appropriate sanctions and penalties as may be determined by the bank.

 James Emejo in Abuja and Nume Ekeghe

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