CBN orders banks, fintech firms to make GPS tracking mandatory for PoS terminals

The Central Bank of Nigeria has ordered banks, fintech companies and other licensed payment operators to install GPS tracking on all Point of Sale (PoS) terminals, in a bid to tighten oversight of electronic transactions.

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The directive was contained in a circular signed by Rakiya Yusuf, director of the payments system supervision department, dated 25 August.

The CBN said all PoS devices must have “native geo-location services enabled, with Double-Frequency GPS receivers for reliable geo-location service.”

Operators are required to register each terminal with a payment terminal service aggregator and provide accurate coordinates of the merchant or agent’s business location.

The new rules mean every PoS machine must capture and transmit its location data at the start of a transaction.

Activity outside a 10-metre radius of the registered business or service point will be flagged, while terminals that are not geo-tagged will be barred from processing payments.

The regulator said existing machines must be tagged within 60 days, and new devices must be tagged before certification and activation.

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“Geo-location data must be captured at transaction initiation and included in the message payload as a mandatory reporting field: Terminals not directly routed to a PTSA are not permitted to transact.

“All existing terminals and newly registered terminals must ensure strict adherence always to approved MSC code per sector: All existing terminals must be geo-tagged within 60 days of this circular; new terminals going forward must be geo-tagged before certification and activation,” the circular read.

The measures come amid a surge in the use of PoS machines across Nigeria. Once considered an alternative, PoS agents have become a central part of the country’s cash economy, handling millions of payments daily as banks cut branch networks and ATMs often run dry.

But the boom has also created risks, as fraud complaints involving PoS agents have increased, and security officials say kidnappers have, in some cases, forced victims to transfer ransom money through nearby PoS operators to avoid detection.

New Standard

The CBN also directed payment companies to adopt a new global standard for transaction messages, known as ISO 20022, by 31 October.

The standard, developed by SWIFT, is expected to improve the quality of transaction data and make both domestic and cross-border payments more secure and efficient.

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All PoS devices must run on Android version 10 or higher to integrate with the National Central Switch, which will host the software kit for geolocation monitoring and geofencing.

“All payment transaction messages exchanged domestically or internationally must be formatted in ISO 20022 in line with CBN and SWIFT specifications.

“All Institutions shall ensure complete and accurate population of mandatory data elements, including payer/payee identifiers, merchant/agent identifiers, and transaction metadata.

“All in-scope institutions must complete migration activities and be fully compliant not later than October 31, 2025,” it read.

The bank said it would begin compliance checks by 20 October.