CBN Sets New Market Share Caps for Nigeria Payments

In Short

• The Central Bank of Nigeria, CBN, has introduced new market-structure rules for the Nigeria payments sector.
• The rules limit how much one licensed financial institution can control across both consumer payments and merchant payments.
• If a firm crosses 25% market share on one side, it is capped at 15% on the other side within the same 12-month period.

What Happened

The CBN has issued a circular that introduces market share limits aimed at reducing dominance in Nigeria payments. The focus is on two roles in cashless transactions, consumer issuing and merchant acquiring.

Consumer issuing means providing payment tools to individuals, like bank accounts, payment cards, and digital wallets. Merchant acquiring means helping businesses accept payments, like providing POS terminals, payment gateways, and settlement services.

Under the circular, any licensed financial institution that controls more than 25% of the consumer-issuing market will be restricted to a maximum of 15% market share in merchant-acquiring activities over the same rolling 12-month period. The circular also states the reverse rule, any firm with more than 25% share in merchant acquiring cannot hold more than 15% share in consumer issuing during that period.

This comes as banks and fintechs expand beyond their traditional niches. More firms now want to own both the consumer relationship and the merchant checkout.

Why It Matters

The CBN is trying to avoid a single “gateway” becoming too central to everyday payments. That is a concentration risk, meaning one failure could affect many users and businesses at once.

For large payment providers, the rule could change growth plans and partnership structures. Firms may need to choose where to lead, consumer issuing or merchant acquiring, and collaborate more in the other area.

For merchants, it may support more competition in POS and online checkout, which can influence pricing, uptime, and dispute handling. For consumers, it may reduce the chance that one wallet or card issuer controls too many places where money can be spent.