CBN Targets Hidden Ownership in Banking, Fintech, to Break Payment Sector Dominance

The Central Bank of Nigeria (CBN) has unveiled sweeping reforms aimed at exposing hidden ownership structures in banks and fintech firms, curbing market dominance in the payments industry and compelling financial institutions to store payment transaction data locally from January 1, 2027, as part of efforts to strengthen transparency, competition and financial system stability.

This was stated in a circular signed by the CBN Director, Payment System Supervision Department, Dr Rakiya Yusuf, and issued on June 15, 2026, to Deposit Money Banks (DMBs), Mobile Money Operators (MMOs), Switching Companies, Payment Service Providers (PSPs), Payment Solution Service Providers (PSSPs), and other licensed participants in the payments ecosystem.

The apex bank said it had observed “significant structural developments within the Nigerian Payments ecosystem, characterised by rapid growth in electronic payments, increasing adoption of digital financial services, and the emergence of operators with substantial market presence across key payment activities.”

According to the regulator, while the rapid expansion of digital payments has enhanced innovation, efficiency and financial inclusion, it has also heightened concerns about market concentration and the increasing influence of a few dominant players.

The CBN noted that recent developments had “raised concerns relating to market concentration, operational dependence, systemic importance, transparency of ownership structures, and the localisation of critical payment data.”

To address these concerns, the apex bank directed all regulated institutions with digital payment operations to disclose the Ultimate Beneficial Ownership (UBO) of significant shareholders.

The circular stated that institutions “shall disclose the Ultimate Beneficial Ownership (UBO) of significant shareholders in accordance with applicable extant laws and regulations including Anti-Money Laundering, Combating the Financing of Terrorism and Counter Proliferation Financing (AML/CFT/CPF) regulations.”

It further directed operators to maintain accurate and updated ownership records and make such information available to the CBN upon request. The move is expected to expose complex ownership arrangements, improve transparency, and strengthen regulatory oversight in a sector that has attracted substantial local and foreign investment over the past decade.

In a major push to prevent excessive concentration of market power, the CBN also introduced new market structure requirements designed to limit the extent to which a single operator can dominate both consumer card issuing and merchant acquiring businesses.

Under the new framework, any licensed institution controlling more than 25 per cent market share in consumer issuing activities within a rolling 12-month period will not be permitted to hold more than 15 per cent market share in merchant acquiring activities during the same period.

Similarly, institutions with over 25 per cent market share in merchant acquiring activities will be restricted to a maximum of 15 per cent market share in consumer issuing activities.

The regulator said the measures were introduced “to improve transparency through beneficial ownership disclosure, address concentration risk, promote a fair, competitive, and resilient payments ecosystem.”

The circular also reflects the CBN’s growing concern over the systemic importance of large payment operators whose services have become critical to the functioning of Nigeria’s financial system. By highlighting issues of “operational dependence” and “systemic importance,” the apex bank signalled that some payment institutions have become so significant that disruptions in their operations could pose wider risks to financial stability.

To strengthen oversight, the CBN directed all regulated entities to submit monthly market share returns in line with prescribed templates and reporting timelines, while institutions affected by the market share thresholds have until December 31, 2026, to fully comply with the new market structure requirements.

The apex bank also ordered all financial institutions and payment participants operating within Nigeria to ensure that payment transaction data generated in the country are stored and managed locally.

According to the circular, “all Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria.” The data localisation requirement will take effect from January 1, 2027.

The CBN warned that compliance with the new directives would be closely monitored and that defaulters would face regulatory sanctions.

“The CBN shall monitor compliance with the provisions of this Circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines,” the regulator stated.