- within Environment, Tax, Government and Public Sector topic(s)
- with readers working within the Media & Information and Retail & Leisure industries
INTRODUCTION
Nigeria's fintech sector has entered a critical phase of regulatory maturation. Regulatory activities in Nigeria's financial technology ("Fintech") sector in 2025 reflected a deliberate policy approach centred on strengthening market integrity, improving governance and oversight and managing systemic risk while supporting innovation and facilitating development. Across open banking, electronic payments, digital lending, remittances, foreign exchange, data protection, blockchain and cryptocurrency, regulators focused on operational controls, conduct standards and enforcement readiness. This shift by the regulators in 2025 signalled that Fintech operators are no longer regarded solely as facilitators of financial inclusion; rather, they are increasingly recognised as systemically relevant participants whose operational or governance failures could have broader implications for the country's financial ecosystem stability. This newsletter examines these developments and considers how evolving regulatory priorities are expected to influence Fintech regulation and market conduct in 2026.
OPEN BANKING
Going into 2025, open banking was one area in the Fintech space where there was expected to be a lot of traction, building on four years of policy development, including the issuance of the Regulatory Framework for Open Banking in Nigeria in 20211 and the Operational Guidelines for Open Banking in Nigeria2 released in 2023. In April 2025, the Central Bank of Nigeria ("CBN") announced that open banking would go live in Nigeria starting in August 2025. This was a significant and widely anticipated move, and the proposed implementation of the policy positioned Nigeria to become one of the African countries to have formally adopted and operationalised open banking at a national level. However, in the months following the announcement, the CBN paused the implementation and postponed its commencement to early 2026.
The CBN cited the need to establish a fully automated system that adequately protects customer data and strengthens consumer safeguards. In particular, it was noted that open banking must operate on the clear principle that customers retain ownership and control of their data – including who can access it, for how long, and the ability to withdraw consent at any time.3. This emphasis reflects a regulatory choice to balance innovation with trust in the regulatory system, particularly in light of Nigeria's rapidly expanding digital finance ecosystem.
PAYMENTS
n the payments space, 2025 saw a heightened focus on cross-border payments, agent banking controls and transaction traceability. Starting on the continent, the Pan-African Payment and Settlement System ("PAPSS"), of which Nigeria is a member, has made remarkable strides, successfully connecting approximately 19 (nineteen) African countries and approximately 160 (one hundred and sixty) commercial banks. This advancement underscores the PAPSS's crucial role in facilitating real-time settlement of cross-border transactions in local currency across diverse markets. In 2025, Nigeria played a leading role in the adoption of PAPSS with 22 (twenty-two) Nigerian commercial banks integrating into the PAPSS network while the CBN strengthened its support by issuing a circular in April 2025 that permitted individuals to send up to US$2,000 and corporates up to US$5,000 using only basic KYC and AML documentation.
2025 also marked the launch of PAPSSCARD, Africa's first Pan-African card scheme, designed to streamline retail transactions across the continent and reduce reliance on international card networks. In addition, PAPSS launched the PAPSS African Currency Marketplace to ease currency conversion challenges by facilitating the direct exchange of sovereign currencies for trade. These exciting developments reflect a bright future for Nigeria and Africa's financial landscape, fostering greater economic collaboration and empowerment.
In October 2025, the CBN issued the Guidelines for the Operations of Agent Banking in Nigeria (the "Agent Banking Guidelines") to strengthen the enabling environment for the provision of safe financial services to the underbanked and to improve financial inclusion, particularly in remote areas of the country. From a payment's perspective, the Agent Banking Guidelines introduced clearer operational standards governing cash-in, cash-out, bill payments and other agent-facilitated transactions. A key feature of the Agent Banking Guidelines is the mandatory geo-tagging of agent locations and devices, which should help the CBN better keep track of the activities of POS operators across the country.
Nigeria reached a major milestone in 2025 with the launch of the National Payment Stack ("NPS") by the Nigeria Inter‑Bank Settlement System ("NIBSS"). The NPS, designed as a next‑generation, ISO 20022‑compliant digital payment infrastructure, recorded its first live transaction on 7th November 2025, executed by PalmPay in partnership with Wema Bank, completing in milliseconds with instant settlement. This inaugural transaction signalled the beginning of full-scale adoption of the NPS, which NIBSS envisions as the future replacement for the current NIBSS Instant Payment ("NIP") scheme.
The NPS represents a strategic shift towards a more unified, interoperable, and resilient national payments infrastructure, designed to support scale, reduce fragmentation, and strengthen transaction reliability across banks, fintechs, and payment service providers. The system subsequently recorded additional live transactions, demonstrating its robustness, scalability, interoperability across banks and fintechs, advanced security features such as multi-layer authentication, and the capability to support high‑volume, real‑time payments. For fintechs, this signals a future in which innovation must increasingly sit on shared infrastructure, with greater emphasis on interoperability, system resilience, and regulatory visibility rather than bespoke or siloed payment rails.
This infrastructure push was reinforced by the CBN Circular on Mandatory Dual Connectivity to Payment Terminal Service Aggregators, issued on 11th December 2025 (the "Circular"), a directive mandating dual connectivity for all acquirers, processors, Payment Terminal Service Providers, and Payment Terminal Service Aggregators to strengthen the resilience of Nigeria's PoS transaction infrastructure. The Circular requires industry operators to maintain active connections with both licensed aggregators, NIBSS and Unified Payment Services Limited ("UPSL"), and ensure automatic failover between them to reduce service disruptions. It further mandates periodic testing of redundancy measures, real-time incident notifications, and reporting obligations for system downtime, with all regulated financial institutions required to achieve full compliance within one month of issuance.
REMITTANCES
IMTO Remittance Inflows and Market Performance
In 2025, remittance inflows to Nigeria through licensed International Money Transfer Operators ("IMTOs") recorded a decline when compared with the corresponding period in 2024. According to data reported by the CBN, total IMTO inflows for the first half of 2025 amounted to approximately US$2.07 billion, representing an 11.78% decrease from the US$2.34 billion recorded in the corresponding period of 2024.4
Continued Operation Under Revised Regulatory Framework
Throughout 2025, IMTOs operated under the revised regulatory guidelines issued by the CBN in 2024, including the removal of fixed exchange-rate caps and enhanced oversight of remittance settlement processes. Although no new standalone IMTO guidelines were issued in 2025, regulatory engagement remained active through supervisory monitoring, reporting requirements, and alignment with broader foreign exchange market reforms.
Please refer to our earlier publication on the IMTO Guidelines using the links here and here for more details.
FOREIGN EXCHANGE
Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account
In 2025, the CBN maintained its strategic focus on expanding remittance inflows and channelling foreign currency flows through formal banking channels. A significant development in this regard was the introduction of the Framework for the Operation of Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account, which took effect on January 1st, 2025 (the "Framework"). This established specialised account structures designed to facilitate diaspora engagement with, and remittances through, Nigeria's financial system. The Framework represents a targeted intervention to enable Non-Resident Nigerians to remit, manage, and deploy foreign earnings within Nigeria across both foreign and local currency denominations.
Looking ahead to 2026, the effectiveness of these account structures in attracting sustained remittance flows and investment capital will depend on operational implementation by deposit money banks, competitive pricing relative to informal channels, and the broader macroeconomic environment. Continued regulatory refinements may be necessary to address emerging challenges and optimise the Framework's impact on foreign exchange liquidity and diaspora economic engagement.
Please refer to our earlier publication on the Framework using the link here for more details.
Implementation of the Nigerian FX Code
The CBN released the Nigerian Foreign Exchange Code on 28th January 2025 ("FX Code") and continued its implementation throughout 2025. The FX Code provides a regulatory framework to promote accountability, transparency, integrity, governance and ethical conduct in foreign exchange transactions within the Nigerian Foreign Exchange Market ("NFEM"). Under the FX Code, market participants are expected to observe principles relating to governance, execution, information sharing, risk management, and settlement processes, thereby strengthening the foundations for orderly FX pricing and reducing opacity in FX trading.
In March 2025, the CBN issued a formal Statement of Commitment to the FX Code. This marked a significant step in the institutionalisation of market conduct standards within the domestic FX market. The Statement confirmed CBN's recognition of the FX Code as embodying principles widely accepted as good practice in foreign exchange markets. Through this commitment, the CBN affirmed its regulatory authority over market participants and pledged to supervise FX market activities in alignment with the prescribed principles. Please use the link here to access our recent publication on the FX Code.
DIGITAL LENDING
In 2025, the Federal Competition and Consumer Protection Commission ("FCCPC") introduced the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations 2025 ("DEON Regulations"). This was one of the most significant reforms to Nigeria's digital lending ecosystem in the year. Designed to address long-standing concerns around predatory lending, opaque terms, data misuse, and abusive recovery practices, the DEON Regulations expand the FCCPC's oversight powers to all commercial entities engaged in consumer lending across physical, digital, online and other non-traditional channels and impose mandatory registration requirements, comprehensive disclosure standards, competition safeguards, and stringent data protection obligations. Existing lenders were required to obtain FCCPC approval within 90 days of commencement, while new entrants must register with the FCCPC before offering services. The FCCPC designated 5th January 2026 as the deadline for compliance amongst stakeholders.
The DEON Regulations also require partnerships by digital lenders to be approved, mandate transparent lending terms, monitor interest-rate practices, and enforce strict timelines for complaint resolution. Together, these provisions aim to create a fairer and more predictable operating environment while raising the conduct and governance standards expected of digital lenders in Nigeria.
However, despite the FCCPC's stated intention to strengthen consumer protection and enhance market discipline, the DEON Regulations have also drawn criticism from stakeholders for introducing regulatory overlap, heightened compliance burdens, and potential jurisdictional conflicts, particularly for lenders already regulated by the CBN or licensed under State moneylending regimes. Stakeholders warn that the FCCPC's broad reach, purporting to regulate all digital lenders, partnerships, advertising practices, pricing disclosures, and contractual terms, could create a multi- layered and sometimes conflicting regulatory environment, increasing operational costs and complicating market entry for smaller Fintech entities. Some also fear that the dual-approval framework could stifle innovation and reduce credit availability, especially for underserved consumers who rely heavily on digital micro-lending. These concerns underscore the need for clearer inter agency coordination and harmonised regulatory boundaries to ensure that the DEON Regulations achieve their consumer-protection goals without undermining competition or financial-inclusion efforts.
DATA PROTECTION AND ANTI MONEY LAUNDERING
Development of the Nigeria Data Protection General Application and Implementation Directive A key regulatory development in 2025 that significantly impacted organisations involved in financial services, including Fintech operators, was the issuance of the General Application and Implementation Directives 2025 (the "GAID"). The GAID aims to provide detailed guidance on the implementation of the Nigeria Data Protection Act 2023 ("NDPA") and to create uniformity in the application of the NDPA. It replaced the Nigeria Data Protection Regulation 2019 and its Implementation Framework 2020. Some of the mandatory compliance measures for data controllers and processors under the GAID include:
- Organisations classified as Data Controllers or Data Processors of Major Importance ("DCPMI") are required to register with the NDPC;
- All data controllers and processors are required to conduct a compliance audit within 15 months of business commencement and subsequently annually;
- DCPMIs categorised as Ultra-High or Extra-High Level must submit their Compliance Audit Returns ("CAR") to the NDPC by 31st March each year;
- Organisations must prepare and maintain detailed reports on their data processing activities every six months;
- Organisations must develop data security policies to ensure the confidentiality, integrity, and availability of personal data they handle;
- DCPMIs are required to appoint a Data Protection Officer. Associate DPOs/Privacy Champions may be designated to support the DPO where the data controller or the data processor carries out data processing or interfaces with data subjects on multiple platforms and places.
- Organisations are required to draft or review their privacy policies to ensure alignment with the NDPA;
- Organisations must report personal data breaches to the NDPC within 72 hours of awareness. If a breach poses a high risk to data subjects, they must be informed immediately.
Compliance Audit Returns Filing
Data controllers and processors are required under the GAID to conduct periodic compliance audits of their data processing activities to ensure they have processes and systems in place and implement appropriate technical and organisational data protection measures to mitigate the risks of data breaches. These audits should follow a risk-based approach, considering the people, processes, and technologies involved in the data processing value chain.
For DCPMIs, filing the CAR is an annual obligation. DCPMIs who were incorporated before 12th June, 2023 must file their CAR to the NDPC by 31st March each year, while those incorporated after this date must file within 15 months of operation and continue to file the CAR annually by 31st March.
In addition, organisations classified as Ultra-High Level (UHL) DCPMIs and Extra-High Level (EHL) DCPMIs are generally required to file the CAR through a licensed Data Protection Compliance Organisation (DPCO) unless otherwise provided by the NDPC.
ARTIFICIAL INTELLIGENCE
Nigeria AI Landscape in 2025
Nigeria's digital economy recorded continued growth in 2025, with market estimates placing the size of Nigeria's AI sector at approximately US$1.4 billion5 and AI-driven revenues within the digital economy at about US$18.3 billion6. At the same time, industry participants have remained attentive to developments surrounding the proposed National Digital Economy and E-Governance Bill, 2024 (the "NDEE Bill"), given its potential to significantly shape the Fintech and artificial intelligence landscape. Reports further indicate that, in 2025, the adoption of generative artificial intelligence in Nigeria was widespread, with usage levels exceeding 70 per cent, significantly above the global average of approximately 48 per cent.7
Within the Fintech sector, major financial service providers have made notable progress in integrating artificial intelligence into their service offerings. For instance, in October 2025, Moniepoint, a leading payments and banking fintech, launched "M", Nigeria's first AI-powered chatbot designed for the informal economy. Built on a large language model, "M" provides conversational access to business and economic data, enabling small enterprises and policymakers to interrogate informal sector metrics.8
These developments illustrate how private Fintech operators are deploying AI for customer support, credit profiling, and data analytics to advance financial inclusion. Regulators have also taken note, with the NDEE Bill proposing the introduction of AI sandboxes to allow startups to test and deploy such systems under regulatory oversight.
Footnotes
1. https://www.cbn.gov.ng/out/2021/psmd/circular%20on%20the%20regulatory%20framework%20on%20open%20banking%20in %20nigeria.pdf
3. https://www.cbn.gov.ng/Out/2025/STD/Q2%202025%20Bulletin.xlsx
4. https://www.cbn.gov.ng/Out/2025/STD/Q2%202025%20Bulletin.xlsx
5. https://www.mastercard.com/news/media/ue4fmcc5/mastercard-ai-in-africa-2025.pdf
8. https://punchng.com/moniepoint-unveils-ai-chatbot-to-support-informal-businesses/
To read this article in full, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
