Digital Payments And CBN’s Financial System Integration

In this report, MARK ITSIBOR takes a look at the call by CBN Governor for the reformation of cross-border payments as a macroeconomic priority

Governor of the Central Bank of Nigeria, Olayemi Cardoso, recently warned that slow and expensive cross-border payment systems are constraining millions of people and small businesses from participating fully in the global economy.

Speaking at the Intergovernmental Group of 24 Technical Group Meetings in Abuja, Cardoso argued that payment inefficiencies remain an underappreciated structural barrier to inclusive growth across emerging and developing economies. “If people cannot move money easily, affordably and safely across borders, they cannot fully participate in modern economic life,” he said, adding that no economy can be more inclusive than its payment system.

His remarks come at a time when Nigeria is pushing for deeper global financial integration while navigating domestic reforms that have imposed significant short-term costs on households and businesses.

The Central Bank Governor called for coordinated reforms in cross-border digital payments to drive inclusive growth, strengthen financial stability, and deepen global financial integration across developing economies.

For the central bank boss, efficient payment systems are essential for economic inclusion. But building a system that works and attracts more participants requires fixing issues around high remittance costs, settlement delays, fragmented systems, and heavy compliance burdens. Reforms in the financial system are meant to address these limitations and for a more efficient and seamless payment ecosystem that benefits all stakeholders.

The e-payment future of developing economies depends largely on how the reforms and integration in the financial services sector are handled.

For Nigeria and other emerging economies, the path forward requires policies that encourage investment, support innovation and provide buffers for financial institutions to seamlessly handle cross-border payments.

Such balanced approach requires countries to build stronger economies, attract investment that would improve e-payment experience for their citizenry.

That explains why the Central Bank of Nigeria (CBN), Olayemi Cardoso, sought for intensive and unformed reforms in digital cross-border payments to achieve desired growth and stability in the financial system.

Speaking at the G‑24 Technical Group Meetings held in Abuja, he emphasised that efficient payment systems are essential for economic inclusion. He noted that high remittance costs, settlement delays, fragmented systems, and heavy compliance burdens still limit the participation of households and Micro, Small and Medium Enterprises (MSMEs) in global trade.

For him,  high remittance costs, settlement delays, fragmented systems, and heavy compliance burdens still limit the participation of households and Micro, Small and Medium Enterprises (MSMEs) in global trade.

He highlighted that global remittance corridors still incur average costs above six per cent, with settlement delays of several days, excluding millions from modern economic activity.

He cautioned that while digital payments present significant opportunities, they also carry risks such as currency substitution, weakened monetary transmission, increased FX volatility, capital-flow pressures, and regulatory fragmentation.

On Nigeria’s reforms, he stated: “We have strengthened our Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) frameworks in line with Financial Action Task Force (FATF) guidelines, requiring strict dual-screening of cross-border transactions to mitigate risks”.

He stated that to deepen regional integration, the CBN introduced simplified Know Your Customer/AML requirements for low-value cross-border transactions to encourage broader participation in PAPSS, easing processes for Nigerian SMEs and enabling faster intra-African trade payments.

“We have also embraced fintech innovation through our Regulatory Sandbox, allowing payment-focused fintechs to test secure, instant cross-border solutions under close CBN supervision. Nigeria’s commitment to working with G-24 members, the IMF, the World Bank Group, and other partners to build a more inclusive, resilient, and development-oriented global financial architecture,” he said.

The G-24 TGM 2026, themed “Mobilising finance for sustainable, inclusive, and job-rich transformation,” convened global financial stakeholders to advance the modernisation of finance in support of emerging and developing economies.

Nigeria’s milestones in strengthening AML/CFT

Recall that the Financial Action Task Force (FATF) recently removed Nigeria from its grey list of countries with money laundering and terrorist financing risks.

Commenting on the announcement, Cardoso, said: “The FATF’s decision to remove Nigeria from the grey list is a strong affirmation of our reform trajectory and the growing integrity of our financial system it reflects a clear policy direction and the coordinated efforts of key national institutions working together to deliver sustainable, standards-based reforms. Our priority now is to consolidate these gains, ensuring that compliance, innovation, and trust continue to advance hand in hand to reinforce financial stability and strengthen Nigeria’s global credibility.”

The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

For Nigeria, exiting FATF grey list, opened her potential in the global financial markets. The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

The Paris-based watchdog’s decision represents a huge progress for Nigeria financial system as it works to restore investor confidence, reduce the cost of capital and strengthen financial system credibility.

Other countries removed from the list include, South Africa, Mozambique and Burkina Faso.

“As of February 2025, the FATF has reviewed 139 countries and jurisdictions and publicly identified 114 of them. Of these, 86 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process,” the report said.

FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country,” it said.

By closing gaps in regulatory oversight and enhancing enforcement against illicit financial flows, the four nations have now met the FATF’s requirements for delisting, boosting their standing among global financial institutions and capital markets.

Nigeria and South Africa were added to the list in February 2023 while Mozambique was included in October 2022 and Burkina Faso initially in February 2021.

President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said: “The recently announcement of the Financial Action Task Force on the Exist of Nigeria from its Grey list known as Dirty money list shows Nigeria commitment in achieving the 40 FATF recommendations. The move has tremendously induced confidence, and removed tension in the financial market”.

Payment‑System Modernisation & Digital Finance

Cardoso explained that Nigeria’s digital‑finance transformation accelerated in 2025, reflecting our twin priorities of fostering innovation while safeguarding stability across the payments ecosystem.

Earlier last year, the CBN extended our Payment System Vision roadmap to 2028,  an ambitious commitment to modernise payments infrastructure and strengthen cybersecurity.

“More than 12 million contactless payment cards are now in circulation. Our regulatory sandbox has expanded to over 40 fintech innovators, enabling safe experimentation and responsible scaling of new digital‑finance solutions,” he said.

Revised agent‑banking guidelines have tightened anti‑money‑laundering controls, including geo‑fencing of high‑risk areas, while improving consumer protection at the last mile. Integration across switching companies has improved, bringing Nigeria closer to seamless domestic interoperability.

Supported by these measures, Nigeria today stands among Africa’s most advanced digital payments markets, with a dynamic fintech ecosystem that has produced eight of the continent’s nine unicorns. By mid-2025, leading fintech apps had surpassed 10 million downloads each, with one surpassing 50 million downloads, reflecting deep consumer adoption.

As digital assets, tokenisation and stablecoins become critical topics for central banks worldwide, our stance remains clear: we will lead thoughtfully, with discipline and clarity of purpose. Innovation must proceed responsibly, anchored in consumer protection and financial stability.

The CBN says it will continue to steer monetary policy with discipline, anchored firmly to its core mandate of price stability.

“Stability remains the bedrock upon which investment flourishes, resources are allocated efficiently, and purchasing power is protected. In 2026, we will deepen engagement with stakeholders, strengthen collaboration with other regulators and international partners, and foster responsible innovation across the financial system,” Cardoso said.

“We will continue to provide forward guidance, protect the integrity of our financial markets, leverage technology and AI to improve decision‑making, and build institutional capacity to support an evolving and resilient financial system,” he stated.

By remaining disciplined, forward‑looking, and true to our mandate, we will ensure that Nigeria’s economy remains stable, inclusive, and primed for sustainable growth.

E-payment gains for economies

Cardoso said he witnessed first-hand the transformative power of digital finance to broaden economic participation, create meaningful employment, and improve the lives of millions of Nigerians. It is for this reason that the CBN is intent on seizing our nation’s unique opportunity to harness fintech innovation for national development.

“Nigeria is undergoing a rapid and significant financial evolution.

Over the past decade, our nation’s fintech landscape has grown from a handful of startups into one of Africa’s most vibrant innovation ecosystems. Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” he said.

He explained that with improved stability of Nigeria’s currency and domestic economy, it is clearer than ever that financial innovation can advance inclusion at scale.

“This report reflects the Central Bank’s commitment to fostering a thriving fintech landscape while safeguarding the stability of our financial system. It is the product of extensive engagement between regulators and industry stakeholders. By surveying fintech operators, financial institutions and policymakers, we have gathered candid insights on what is working, what is not, and where we can do better”.

“The findings illuminate both our progress and the gaps we must address, from modernising regulatory frameworks and payments infrastructure to supporting startups in reaching Nigeria’s unbanked communities. The report is careful to contextualise Nigeria’s fintech journey within global trends, reminding us that we are part of a rapidly evolving digital finance landscape that offers immense opportunities as well as new risks,” he stated.

Continuing, he said that for the CBN, innovation is a strategic imperative.

“We are committed to creating an environment where new ideas can flourish under prudent oversight, and where inclusion is at the heart of our endeavours. Fintech must help deliver financial services to the last mile of our population, from the bustling cities to the rural villages, so that no Nigerian is left behind in the digital economy.

According to the CBN, financial technology, or fintech, refers to the use of innovative digital technologies to deliver financial services. It encompasses a broad range of market segments, from digital payments and remittances to lending platforms, crowdfunding, insurance technology (InsurTech), investment and wealth management technology (WealthTech), and regulatory technology (RegTech).

It explained that as digital platforms transform how people send money, access credit, and interact with financial institutions, Nigeria finds itself both a leader and a testing ground.

Nigeria hosts some of Africa’s most influential fintech firms and continues to attract significant investment. In 2024, Nigerian startups raised over US$520 million in equity funding out of a continental total of US$2.2 billion, ranking among the continent’s leading ecosystems by both capital raised and deal activity.

And this trend is not new: five years earlier, in 2019, Nigerian tech startups raised approximately US$747 million, about 37 per cent of all African startup funding that year.

This performance, amid significant global macroeconomic gyrations, underscores Nigeria’s position as a key hub for financial innovation. However, Nigeria’s fintech funding has largely depended on foreign capital, making the ecosystem vulnerable to global market fluctuations.