The Central Bank of Nigeria (CBN) issued a circular on Monday introducing market-structure rules that restrict any financial institution controlling more than 25% of the consumer-issuing market to a maximum 15% market share in merchant-acquiring activities. The rules aim to prevent excessive concentration and systemic risk in Nigeria's digital payments ecosystem, which processed ₦1.2 quadrillion ($884.78 billion) in 2025. The restrictions take effect on December 31, 2026, and apply to banks and fintechs expanding across consumer and merchant payment services.
CBN Sets 25% Consumer Market Threshold for Merchant Restrictions
The CBN stated in its circular that any licenced financial institution engaged in merchant acquiring activities, whether individually or as part of a group of related entities, holding more than 25% market share in merchant acquiring within any rolling twelve-month period cannot hold more than 15% market share in consumer issuing during the same period. Consumer issuing refers to services enabling consumers to make payments, including bank accounts, payment cards, digital wallets, and other payment instruments. Merchant acquiring encompasses infrastructure enabling businesses to accept payments, including payment gateways, Point-of-Sale (PoS) services, and merchant settlement systems.
The restrictions apply not only to individual companies but also to groups of related entities. Financial institutions cannot circumvent the rules by separating consumer and merchant businesses into different subsidiaries while retaining common ownership or control.
Paystack, Flutterwave, and Major Banks Face Market Share Limits
The rule has significant implications for major fintech companies such as Paystack, Flutterwave, and Moniepoint, many of which have built strong merchant-payment businesses and are expanding into customer-facing banking services. In January, Paystack acquired Ladder Microfinance Bank. In April, Flutterwave secured an MFB licence after acquiring open banking startup Mono, as fintechs move to convert payment users into banking customers.
Traditional banks such as United Bank for Africa could also be affected if they seek to build substantial market share in merchant acquiring while retaining dominant positions in consumer banking. The CBN introduced the requirements in response to concerns around market concentration, operational dependence, and the emergence of operators with substantial market presence across key payment activities.
CBN Introduces Compliance and Reporting Requirements
The CBN stated that all regulated entities shall submit monthly market share returns in accordance with prescribed templates and timelines. The market-share limits form part of a broader set of reforms targeting the payments industry. The CBN is also requiring banks and fintechs to disclose the ultimate beneficial owners of significant shareholdings and is pushing operators to use local cloud infrastructure as part of efforts to strengthen oversight and localise critical payments data.
The CBN added that it shall monitor compliance with the provisions of the circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines.
FAQ
What market share limits did the CBN introduce for payment firms?
The CBN introduced rules restricting any financial institution controlling more than 25% of the consumer-issuing market to a maximum 15% market share in merchant-acquiring activities. The restrictions take effect on December 31, 2026.
Which companies are affected by the CBN's new payment market rules?
Major fintech companies such as Paystack, Flutterwave, and Moniepoint are affected, as well as traditional banks such as United Bank for Africa. The rules apply to any licenced financial institution, individually or as part of a group of related entities, engaged in both consumer issuing and merchant acquiring activities.
What compliance requirements did the CBN announce for payment firms?
The CBN requires all regulated entities to submit monthly market share returns in accordance with prescribed templates and timelines. The regulator also mandates disclosure of ultimate beneficial owners of significant shareholdings and use of local cloud infrastructure for critical payments data.
