CBN identifies loopholes in POS transactions, issues circular on pre-authorisation of cards

Having identified that the predominant use of single messaging format for Point of Sale (POS) transactions has become an obstacle to the use of pre-authorisation as a mode of payment, the Central Bank of Nigeria (CBN) has issued a circular in which operators in the financial services industry must apply its provisions with immediate effect.

Appropriate sanctions would be imposed for contraventions and non-compliance with the circular upon expiration of the deadline of July 31, 2020, the apex bank said in the circular signed by Musa Jimoh, Director, Payments System Management Department.

“As part of its commitment to facilitate the development of the Nigerian payments system and deepen the adoption of various electronic payment options available to users, the Central Bank of Nigeria (CBN) has identified the predominant use of Single messaging format for POS transactions as an obstacle to the use of pre-authorisation as a mode of payment in Nigeria.

“In order to enable pre-authorisation and Sales-completion of card transactions, the CBN hereby directs as follow:

1. a)  All merchant acquirers are required to obtain Acquirer Device Validation certification or the applicable testing completion notification from CBN licensed card schemes.
2. b)   By this directive, all POS Terminals must have the capability for transaction pre-authorisation and sales completion.
3. c) PTSA (NIBSS) to ensure that only banks that have conducted and obtained PoS Terminal Validation Certificate for pre-authorisation and sales- completion from the relevant card schemes, have their PoS Terminals registered on the Central Terminal Management System.
4. d)  All card issuers are required to build the capability and enable the processes for pre-authorisation and sales-completion of transactions.
5. e)     Card Schemes are also required to provide online simulators for acquirers and issuers to test their systems, when necessary.”