5 big changes PoS operators must know about CBN’s new agency banking rules

The Central Bank of Nigeria (CBN) has introduced new regulations for agency banking providers and POS operators. This initiative is part of its efforts to regulate the rapidly expanding agency banking sector, which has experienced a surge of operators across the country over the past five years.

Agency banking, powered by POS operators, has emerged as a crucial method for accessing cash and making payments for Nigerians, particularly in areas with limited bank branches. However, this rapid growth has brought about significant challenges, including fraud, cloned terminals, and a lack of transparency regarding transaction locations.

The Central Bank of Nigeria (CBN) has stated that the new guidelines aim to mitigate risks, enhance transaction traceability, and protect consumers. With billions of naira in transaction value flowing through agency banking every day, regulators are tightening their oversight to keep up with the scale of the business.

For operators and fintech companies, this necessitates significant changes to how their devices operate and their locations. Below, we outline the five most important rules of the new circular and their significance.

The 10-metre rule: an end to roaming POS operators

The primary change is the geographic limitation. According to the new directive, a POS terminal must function solely within 10 meters of its registered business address. Agents can no longer take their devices to markets, bus stops, or various shops to conduct transactions unless these places are within 10 metres of their registered addresses.

If your POS is registered at Shop A, you cannot use it at Shop B two streets away to process payments. Doing so could flag the transaction or result in the terminal being blocked.

This policy aims to prevent the use of “roaming terminals,” which are often exploited by thieves operating stolen or cloned devices in unfamiliar areas. By tying each device to a specific location, CBN can more easily identify unusual movement patterns and prevent misuse. For customers, this approach minimises the risk of giving their card to an unverified or questionable agent.

It, however, could lead to loss of business and clientele for agents and operators whose business models hinge on their ability to roam. To those operators, the business wouldn’t be as lucrative as it used to be when they had the freedom to be nomads.

Geo-tagging for real-time tracking of transactions

The new CBN guidelines further require all POS devices to be geo-tagged, meaning their GPS coordinates must be recorded and registered. Geo-tagging allows every transaction to be tracked to a specific location in real time. This makes it significantly more difficult for “ghost terminals,” which process transactions from unidentified or illegal locations, to operate.

If a cloned Point of Sale (POS) device is used in a location different from its registered GPS coordinates, the transaction can be flagged in real time, and the terminal could be disabled. Geo-tagging also means regulators could track transactions and flag the ones they suspect to be fraudulent or carried out by bad players. This is an effective fraud prevention measure that helps protect both operators and consumers.

Geo-tagging for new devices must be completed before activation. For old devices, geo-tagging must be carried out not more than 60 days after the announcement. The apex bank has stated that providers should utilise “native geolocation services” along with dual-frequency GPS receivers for improved positioning accuracy.

ISO 20022 messaging standard upgrade

The third major update involves the transition to ISO 20022, a global financial messaging standard. All processors, banks, and POS systems must upgrade their software to support this format by October 31, 2025.

ISO 20022 enables transactions to incorporate more detailed and structured data, including payer and payee information, merchant identifiers, and additional metadata that older systems often overlook.

Improved data enhances traceability, reduces reconciliation discrepancies, accelerates dispute resolution, and aids in fraud detection. It also ensures that Nigerian transactions align with international systems, which is crucial given the increasing volume of cross-border payments and fintech collaborations..

POS operators will likely need software upgrades and closer collaboration with their Payment Terminal Service Providers (PTSPs) to prevent disruption when the deadline is reached.

Routing through licensed aggregators and device certification

CBN is tightening regulations on transaction routing. All POS terminals must route through a licensed Payment Terminal Service Aggregator (PTSA), such as NIBSS or Unified Payment Services.

Additionally, devices and their software must be certified by the National Central Switch (NCS) and must have a geolocation tracking SDK installed before processing transactions.

This ensures that all transactions go through a secure, regulated infrastructure. Certification guarantees that terminals comply with security and technical standards. Older or non-certified terminals may no longer meet the new regulations, requiring operators to upgrade.

Compliance inspections from October 20, 2025

Starting October 20, 2025, the CBN will begin on-ground inspections to ensure that operators comply with the new framework.

Inspectors will verify that terminals are correctly geo-tagged, operating within a 10-meter range, and using updated software that complies with ISO 20022. Machines with outdated systems, such as those running on Android versions below 10, may fail the inspection and will be disconnected.

This step ensures that the new system is actively enforced. Devices that do not comply will be deactivated, resulting in an immediate loss of revenue for agents who depend on daily transactions.

The big picture

These regulations represent the most significant overhaul of Nigeria’s agency banking framework in years. They enhance discipline in the deployment of POS terminals, tracking methods, and data collection.

Read also: CAC registers 100,000 PoS operators out of 250,000 projection

For POS operators, compliance will require investments in new terminals, software updates, and more control over terminal placements. Although this process may be challenging for small businesses, the ultimate goal is to create a more secure and transparent payments landscape.

If these reforms are implemented effectively, they can reduce fraud, restore consumer confidence, and enhance the role of agency banking as a crucial driver of financial inclusion in Nigeria.