CBN Bans Palmpay, Opay and Others’ New Customers 

Following a recent regulation by the Central Bank of Nigeria (CBN) prohibiting mobile money operators, including well-known fintech companies, from onboarding new users, panic has erupted among certain bank customers.

Key participants in the market, including OPay, Palmpay, Kuda Bank, and Moniepoint, are immediately impacted by this regulatory action, which has the support of the Bank Customers Association of Nigeria.

According to trustworthy sources in major fintech companies who talked with Punch under the condition of anonymity, the directive is a result of the CBN’s thorough examination of the Know-Your-Customer (KYC) procedures these businesses use.

Concerns have been raised recently about possible gaps that may be used to finance terrorism and launder money.

The leaders of multiple fintech companies were called to Abuja last week to talk about KYC-related concerns, indicating heightened regulatory monitoring in this quickly expanding industry.

By taking a proactive approach, the CBN hopes to guarantee the integrity and stability of Nigeria’s financial system by bringing fintechs’ operational requirements into line with those of conventional deposit money banks and microfinance banks.

The CBN’s decision has the approval of the President of the Bank Customers Association of Nigeria, who emphasised that all financial institutions must adhere to rigorous regulations.

“The strict regulations that govern deposit money banks must also apply to fintechs and microfinance banks to ensure the integrity of the financial institutions,” Ogubunka stated.

He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves on the companies now to get their KYC right.

“Let them do what they are supposed to do. KYC applies to banks and other financial institutions that deposit money. It should also apply to them so that the regulators can understand what is going on and hold them accountable.”

Because of worries about KYC procedures, Fidelity Bank restricted transfers to OPay, Palmpay, Kuda, and Moniepoint in October 2023.

In November 2023, the CBN responded by introducing new KYC regulations that seemed to specifically target fintech businesses and apply to all financial institutions.

According to a Moniepoint source, the business cooperated with the mandate, thereby stopping the establishment of new accounts on their site. The source disclaimed any involvement with KYC, though.

Given that the business opens roughly 100 new accounts per day, the new order might have an impact on the goal.

According to the source, fintechs have contributed significantly to the nation’s increased financial inclusion.

According to what the corporation stated last year, it has implemented a strong and dependable digital payment infrastructure that has enabled an average monthly transaction value of $12 billion for around 1.6 million businesses.

A senior employee of PalmPay confirmed that there was a CBN directive for fintechs to reassess their KYC processes.

This is causing a temporary pause in onboarding new customers, the source stated.

She clarified that the KYC review was a collaborative effort with the CBN, and fintechs were awaiting further instructions without a specified timeline for resolution.