Payment methods

Contactless Payment Methods – The Regulation of Quick Response Codes (QR) in Nigeria – Technology

Nigeria: Contactless Payment Methods – The Regulation of Quick Response Codes (QR) in Nigeria

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A. Presentation

A world without cash was hard to imagine in the ’80s and’ 90s (at least for most of us). It was unimaginable for you to make successful payments without cash, debit or credit card. What exactly were you using then ?! Before our eyes, the world has started to change, the cell phone has become more than a telephone, it has become your everything; your notepad, desktop, camera and payment device (with the use of Quick Response [QR] Codes and near-field communication [NFC] Key words).

The use of QR codes as a payment method was introduced by Alipay in 2011 and has become a widely used payment method in China. NFC tags (which are chips embedded in smartphones) were first used in countries like the UK.

In Nigeria, QR codes as a payment method are gradually gaining ground. Financial technology companies such as Paystack and Flutterwave now offer sellers and service providers the ability to receive payment by generating and printing or sending a QR code to their customers, even on social media platforms such as Facebook . Many traditional financial institutions (such as First Bank and Guaranty Trust Bank) have updated their mobile apps to allow customers to use QR codes as a method of payment.

To properly regulate the use of QR codes as a means of payment in Nigeria, the Central Bank of Nigeria (CBN) issued on January 13, 2021 a Framework for QR Code Payments in Nigeria (“Framework”). We have highlighted some important provisions of the Framework below.

B. Who are the participants?

The main participants in a QR code transaction, as shown in the box, are:

  1. The merchant – this is the store owner, seller, or service provider who requested payment through a QR code.
  2. The customer – this is the person who has to pay the merchant using the QR code.
  3. The Issuer – this is the Client’s financial institution.
  4. The acquirer – this is the merchant’s financial institution.

C. What are their obligations?

  1. When a merchant chooses to receive payment via QR codes, they can only view approved QR codes in Nigeria.
  2. The merchant must also comply with all existing CBN regulations and acquirer rules.
  3. The Client is required to use the QR Code application (provided by his financial institution, i.e. the Issuer) without modifications and to adhere to any Issuer security protocol.
  4. The Issuer is required to provide the Customer, on request, with a QR Code Payment application that complies with QR Code regulations; and ensure that all customers update the application within 14 days of deploying an update or patch.
  5. Issuers are also required to send a quarterly risk management assessment report to the Director of the Payment Systems Management Department, CBN.
  6. The purchaser is required to ensure the correct use of QR codes on the merchant’s site or platform; and make sure the technology and protocol used for QR code comply with QR code payment regulations.
  7. The value of each QR code transaction must be returned by the acquirer to the merchant within one day of the transaction.
  8. The Acquirer and the Issuer must guarantee the security of their system during such transactions.
  9. Where a switch or payment service provider is involved, they are required to facilitate interoperability between issuer and acquirer and to comply with the framework and other CBN regulations on electronic payments.

D. Other provisions of the framework

  1. The framework adopts the merchant presented mode specification for Nigeria (as opposed to customer presented mode), which means the merchant must present the QR code that buyers can scan in order to complete the payment transaction.
  2. Please also note that Nigeria Inter-Bank Settlement System Plc (as payment terminal services aggregator) must certify QR codes, payment applications, updates and fixes.

E. Conclusion

Payment using QR codes in Nigeria is gradually becoming the preferred choice of Nigerian businesses as it is an affordable alternative to using point of sale solutions. The publication of the framework is a positive step to encourage innovation in financial services and promote the secure use of QR codes in Nigeria.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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On February 5, 2021, the Central Bank of Nigeria (“CBN”) called on banks and other financial institutions to refrain from dealing with cryptocurrency (a digital currency) and to facilitate payment for crypto exchanges. cash.


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