GUIDELINES ON INSTANT (INTER-BANK)

ELECTRONIC FUNDS TRANSFER SERVICES

IN NIGERIA

DECEMBER 2016

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1.0 PREAMBLE

In exercise of the powers conferred on the Bank by Section 28 (1) (b) of the
Central Bank of Nigeria Act 1991 (as amended) to issue guidelines for the
maintenance of adequate and reasonable financial services for the public and
to ensure high standards of conduct and management throughout the banking
system; and pursuant to its inherent powers, the Central Bank of Nigeria (CBN)
hereby issues the following guidelines for the operations of Instant (inter-bank)
Electronic Funds Transfer (EFT) services in Nigeria.

2.0 SCOPE

The scope of this document is limited to:

 setting out the procedures for the operation of Instant (inter-bank)

Electronic Funds Transfer services in Nigeria,

 prescribing the rights and obligations of the parties to such services.

 provision of the minimum standards for the operations of the parties to EFT
services

3.0 OBJECTIVES

1. To prescribe standards to guide the provision and implementation of instant

EFT services in Nigeria.

2. To provide minimum operational standards and streamline the operations

of the various Instant EFT platforms operating in Nigeria.

3. To stipulate procedures geared towards the enhancement of the

soundness of instant EFT services, while adequately protecting the interests
of instant EFT customers and operators

4.0 PARTIES TO INSTANT (INTER-BANK) ELECTRONIC FUNDS TRANSFER SERVICES

Parties to Instant Electronic Funds Transfer shall include:

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 i. The Central Bank of Nigeria as Regulator
ii. Financial Institutions (FIs)
a. Deposit Money Banks
b. Other Financial Institutions (OFIs) i.e. licensed Primary Mortgage
banks, Micro-Finance Banks, and Mobile Money Operators
c. Development Finance Institutions (DFI)
iii. Instant EFT Service Providers whose settlement obligations are guaranteed
by Deposit Money Banks
iv. Customers (Originator and Beneficiary)
v. The Automated Clearing House (ACH), Cheque and Instant Payments
Scheme Board

5.0 RIGHTS AND RESPONSIBILITIES OF PARTIES TO INSTANT EFT

The section sets out the rights and responsibilities of all parties to Electronic Funds
Transfer under the guidelines.

5.1 RIGHTS AND RESPONSIBILITIES OF AN INSTANT EFT SERVICE PROVIDER

An Instant EFT service provider shall:

1. Ensure compliance with the minimum standards issued by the CBN and
as amended from time to time
2. Put in place on its platform operational guidelines specifying in clear
terms the responsibilities of each party, operational rules and procedures
(including dispute handling) and liabilities of parties in the event of loss of
funds arising from negligence of any of the parties
3. Provide, in the minimum, quarterly trainings and feedback for the
sending and receiving entities
4. Ensure that all notifications and information that its employees obtain in
the course of discharging their responsibilities are treated as confidential
5. Provide Name Enquiry support to minimize instances of wrong credits
6. Put in place a robust Dispute Resolution System (DRS) for users of its
platform
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7. Establish adequate security procedures to ensure the safety and security
of its information and those of its clients, which shall include physical,
transactions, logical, network and enterprise security
8. Submit to the CBN its Enterprise Risk Management framework annually
9. In addition to the primary site, maintain a business continuity
arrangement to ensure failsafe operation
10. Ensure that its Business Continuity Plan must be attested to by relevant
certifications e.g. ISO22301
11. Ensure full compliance with relevant provisions of payments system
Guidelines, Policies and Circulars issued by the CBN in relation to its
operations
12. Supply to the CBN, information on usage, volume and value of
transactions and other relevant information, as and when due, and in
the format required by the CBN
13. Connect to the CBN industry Anti-Fraud system and notify same of all
transactions consummated on its network for online fraud monitoring
14. Report all instances of fraud/attempted fraud on its network to the CBN
promptly
15. In case of system failure, shall automatically switch to its standby or
back-up site
16. Notify clients at the point of EFT initiation, details of its operating hours
and service support contacts
17. Undertake measures to prevent the use of its Instant EFT platform for
purposes associated with terrorism and other financial crimes

5.2 RIGHTS AND RESPONSIBILITIES OF SENDING ENTITY

A Sending Entity in an Instant EFT transaction shall:

1. Comply with the approved Anti-Money Laundering/Combating
Financing of Terrorism (AML/CFT) directive, and transaction value limits
as may be set from time to time by relevant regulatory bodies

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2. Provide the BVN details of its clients in the Instant EFT message for all
transfers carried out on behalf of customers
3. Not provide instant EFT services to Walk-in customers
4. Fully secure debit against client’s account before initiating transfer
5. Provide notification of debit to client’s account as agreed with the
customer
6. Ensure that EFT messages contain the sender’s name and account
number, beneficiary name and account number, narration and other
information specified by customers at the point of initiating a transfer, to
aid reconciliation
7. Notify customer of the status of Instant EFT as agreed in the terms and
conditions of its platform
8. Refund customer full proceeds of failed transactions returned by the
Receiving Entity or which the Sending Entity is unable to process within 24
hours as defined in section
9. Permit transfers from all its service delivery channels – branches, internet
banking, mobile banking, ATM/Kiosks, etc
10. Publicize instant EFT services and the instant EFT FAQ to its customers
11. Receive Customer complaints regarding EFT problems, and pursue
resolution to a logical conclusion latest by next business day
12. Provide Funds Transfer receipt to the customer as transaction evidence

5.3 RIGHTS AND RESPONSIBILITIES OF RECEIVING ENTITY

A Receiving Entity in an Instant EFT transaction shall:

1. Comply with the approved Anti-Money Laundering/Combating
Financing of Terrorism (AML/CFT) directive, and transaction value limits
as may be set from time to time by the relevant bodies.
2. Apply successful Instant EFT proceeds to client’s account within 5
minutes;
3. Where security, system or other considerations make (2) above

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 impracticable within 24 hours, the beneficiary shall be notified of the
pending credit and when the credit will be applied
4. Notify customer of the Instant EFT receipt as agreed in the terms and
conditions of its platform
5. Ensure that bank statement of the beneficiary features, in the minimum,
the Sender’s name and Transaction Narration Information as contained
in the inward EFT message, to aid reconciliation by the beneficiary
6. Provide in the transaction status notification, service support contacts a
customer can report to in case of mis-application of credit to a wrong
account.
7. Implement the provisions of 5.4(3) to aid the repatriation of wrongly
applied credits.
8. Process all inward instant debit transactions subject to valid debit
mandates
9. Publicize instant EFT services and the instant EFT FAQ to its customers

5.4 RIGHTS AND RESPONSIBILITIES OF THE CUSTOMER

1. Provide accurate beneficiary account details for every EFT instruction

2. Report problems arising from EFT transactions promptly to the
Sending/Receiving Entity
3. Notify the Receiving Entity promptly whenever an unexpected credit is
applied to his/her bank account
4. Cooperate with the Receiving Entity to refund any amount that is
wrongly credited to the customer account. Where the customer
account is unfunded, the customer shall provide funds within 24 hours.
The customer shall be notified that the consequence of not funding the
account within 24 hours includes watch-listing in the financial system,
BVN system, Credit Bureau and reporting to law enforcement agencies.

5.5 RIGHTS AND RESPONSIBILITIES OF THE SCHEME BOARD

The ACH, Cheque and IP Scheme Board shall:

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 1. Provide the business, operational and risk management of the specific
payment scheme, covering all aspects of providing a world-class
payment infrastructure that is benchmarked against the internationally
accepted best-practice as defined by the Principles of Financial
Market Infrastructure (PFMI) published by the Bank for International
Settlements (BIS) through the Committee for Payment and Market
Infrastructure (CPMI)

2. Specifically, be responsible for the development of guiding principles,

guidelines, rules for the Scheme Governance within the regulatory
framework defined by CBN
3. Be responsible for:
 Credit and Liquidity Risk Management

 Settlement procedures and monitoring

 Definition and application of rules for Default Management

 Operations of the scheme in line with market trends

 General Business and Operational Risk Management

 General Organization of the Scheme

 Rules for Access and scheme membership

 Efficiency and Transparency of the Scheme

 Development of new functionality in the scheme based on

assessment of market needs

 Production of metrics that measure and demonstrate the overall

scheme performance, including all metrics requested by CBN for
the overall monitoring of the payment systems infrastructure.
 producing an annual self-assessment of the scheme against the
CPSS/IOSCO Principles for Financial Market Infrastructure, and for

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 commissioning an independent external review once every four
years.
6.0 TYPES OF TRANSACTION
The following transaction types shall be allowed for Instant EFT:
1. One to one – single debit and single credit
2. One to many – single debit and multiple credits
3. Many to one – Multiple debits and single credit

7.0 LIMITATIONS ON INSTANT EFT AMOUNT

The limitations on Instant EFT values shall be set by individual Sending and
Receiving Entities based on individual entity’s’ risk appetite. However, such limits
shall be advised to the EFT Service Provider who would circulate platform limits to
all Sending and Receiving entities to guide platform operations.
In all cases the single Instant EFT limit per transaction shall apply as stipulated by
the CBN.

8.0 SETTLEMENT PROCEDURE

8.1 INSTANT EFT SETTLEMENT CYCLE

Instant EFT transactions shall be settled as agreed amongst participants but

not later than T+1 basis. At least two settlement cycles per day are
encouraged, to minimize the settlement risks associated with deferred net
settlement systems.

8.2 INSTANT EFT SETTLEMENT COLLATERAL

Parties to EFT transfers shall provide adequate collaterals under CBN

approved collateral management system.

9.0 FEES AND CHARGES

Instant EFT service providers and Sending entities shall apply fees and charges in
compliance to the approved Guide to Bank Charges. The Receiving entity shall
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not earn income on funds transferred. However, statutory levies/charges shall
apply.

10.0 DISPUTE RESOLUTION

10.1 GENERAL

The Dispute Resolution System (DRS) process shall be properly documented

and circulated among participants by the Instant EFT Service Provider. All
Instant EFT disputes shall be concluded within 2-working days. However,
where the Sending and Receiving entities fail to agree, the aggrieved party
shall report to the Director, Banking and Payments System Department, CBN
within one (1) week of arbitration.

10.2 WRONG TRANSFER DUE TO BANK ERROR

Where a Sending Entity sends a transaction with a wrong account number

to a Receiving Entity and requests the reversal within 14 days of the
transaction, the Receiving Entity shall immediately oblige without recourse
to the customer (beneficiary) of the Receiving Entity provided funds are
available. An automatic indemnity shall be inferred against the Sending
Entity making the reversal request.

Where funds are not available, the Receiving Entity shall immediately
formally notify its customer that the account was wrongly credited with
feedback to the Sending Entity. The customer shall be notified that the
consequence of not funding the account within 24 hours includes watch-
listing in the financial system, BVN system, Credit Bureau and reporting to
law enforcement agencies.

The Receiving Entity shall reverse the transaction as soon as funds are either
partially or fully available.

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10.3 WRONG TRANSFER DUE TO FRAUD

The provisions of the CBN circular on the Establishment of Fraud Desks shall
apply.

10.4 TRANSFER RECALL DUE TO CUSTOMER ERROR

Where the beneficiary is known to the complainant, the Sending entity shall
encourage the complainant to contact the beneficiary for an amicable
settlement.

The Sending Entity having received a tenable claim from customer shall
notify the Receiving Entity who shall lien the amount in the account of the
beneficiary and thereafter obtain the consent of the beneficiary to
execute refund.

Where the beneficiary does not give consent the chief internal auditors of
the Sending and Receiving Entities shall adjudicate between the two
customers, within 2 weeks of the complaint to resolve the issue, and their
decisions shall be final. Accordingly, the lien shall not last more than 2
weeks.

Where the supposed beneficiary has utilized the fund such that lien could
not be placed, and he/she refuses to fund the beneficiary account to
facilitate refund, the Receiving Entity’s Chief Internal Auditor shall watch-list
the customer’s BVN and the Sending Entity may seek the assistance of Law
Enforcement Agencies (e.g., Police, EFCC, NFIU, etc) for recovery in line
with 5.4(3). The Receiving Entity shall provide assistance as necessary.

10.5 EXCEPTIONS HANDLING

The DRS procedure shall make provisions for exception handling where the
status of a transaction between the EFT service provider and the
Sending/Receiving Entities is indeterminate.

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11.0 SANCTIONS

The approved Clearing System Sanctions, as may be amended from time to time,
shall apply

12.0 AMENDMENTS

All parties to the Instant EFT Service are permitted to propose amendments to
these guidelines. Such amendment proposals shall be formally forwarded to the
office of Director, Banking and Payments System Department (CBN) for
consideration.

13.0 DEFINITIONS

13.1 EFT

Electronic Funds Transfer

13.2 INSTANT (INTER-BANK) EFT

Instant EFT Payments system is when delivery to the Receiving Entity takes
place within 1 minute (60 seconds). A payments system where delivery to
the Receiving Entity occurs beyond 1 minute is considered to be an ACH
system.

13.3 INSTANT (INTER-BANK) EFT SERVICE PROVIDER

A Nigerian company or Financial Institution licensed by the CBN to carry on

the business of facilitating Electronic Funds Transfer services in partnership
with Sending and Receiving Entities.

13.4 SENDING ENTITY

A Nigerian company or Financial Institution licensed by the CBN to carry on

the business of facilitating Electronic Funds Transfer services in Nigeria and
who initiates an Instant EFT on behalf of its customers.

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13.5 RECEIVING ENTITY

A Nigerian company or Financial Institution licensed by the CBN to carry on

the business of facilitating Electronic Funds Transfer services in Nigeria and
who receives the proceeds of Instant EFT on behalf of its customer.

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