Nigeria's central bank restricts payment firms from dominating consumers and merchants

When Nkiru Okezie, a small business owner in Lagos, receives an invoice from her supplier, she's given the option to pay using a variety of platforms, from traditional bank transfers to innovative digital payment services. But behind the scenes, a battle is unfolding between Nigeria's major fintech companies and the Central Bank of Nigeria (CBN), with the regulator now restricting payment firms from dominating both consumers and merchants.

In a circular issued on Monday, the CBN has introduced new market-structure rules designed to prevent any single financial institution from controlling more than 25% of the consumer-issuing market and also holding more than 25% market share in merchant-acquiring activities. The move is aimed at regulating the rapidly expanding digital payments ecosystem in Nigeria, which processed ₦1.2 quadrillion ($884.78 billion) in 2025. Godwin Emefiele, the CBN Governor, has made it clear that this move is necessary to prevent excessive concentration and reduce systemic risk in the payments ecosystem.

Major fintech companies such as Paystack, Flutterwave, and Moniepoint, which have spent years building strong merchant-payment businesses, will be affected by the new rules. These companies are increasingly expanding into customer-facing banking services, having acquired various licenses and banks in recent months. Paystack's acquisition of Ladder Microfinance Bank and Flutterwave's acquisition of Mono, an open banking startup, are examples of this trend. The CBN's new requirements will force these companies to choose between expanding into consumer banking or focusing on merchant acquiring.

Traditional banks such as United Bank for Africa (UBA) could also be affected if they seek to build substantial market share in merchant acquiring while retaining dominant positions in consumer banking. This move by the CBN has significant implications for UBA, which has been expanding its digital payment services in recent years.

The CBN's decision to restrict payment firms from dominating both consumers and merchants is a significant step towards creating a more competitive and inclusive digital payments ecosystem in Nigeria. By preventing excessive concentration, the regulator is promoting a level playing field for all players in the market, including traditional banks, fintech companies, and merchant service providers. This move will undoubtedly lead to increased innovation and competition in the digital payments space, ultimately benefiting consumers and merchants.

In the coming months, we can expect to see significant shifts in the market as fintech companies and traditional banks adjust to the new regulations. Paystack, Flutterwave, and Moniepoint will likely need to reassess their strategies and adjust their business models to comply with the new rules. The CBN's move is a bold step towards creating a more robust and resilient digital payments ecosystem in Nigeria, and it will be interesting to see how the market responds to this change.

The CBN's new rules will take effect on December 31, 2026, and it's clear that the regulator is serious about preventing excessive concentration in the digital payments ecosystem. As the market adjusts to this new reality, one thing is certain: the future of digital payments in Nigeria will be shaped by the CBN's bold move to regulate the sector.