By Chinedu Okafor, African Business Correspondent
The Central Bank of Nigeria (CBN) has rolled out two landmark directives that could reshape the nation’s financial ecosystem: the Circular on Revised Cash-Related Policies and the Circular on Mandatory Dual Connectivity for POS Terminals. Both policies, effective January 2026, aim to tackle deep-rooted inefficiencies in cash handling and persistent vulnerabilities in Nigeria’s payment systems.
Cash Management Overhaul
The revised cash-related policies scrap all deposit limits for verified account holders, allowing unrestricted lodgements through banks, ATMs, and agents. This move is expected to unlock trillions of naira in idle cash, boosting liquidity for businesses, especially SMEs.
On the flip side, withdrawals are now capped at ₦500,000 weekly for individuals and ₦5 million for businesses, with excess withdrawals attracting a 3–5% penalty fee. ATM withdrawals are limited to ₦100,000 per transaction and ₦500,000 weekly, while third-party cheque encashments remain capped at ₦100,000.
The CBN has also mandated stricter compliance measures, including quarterly audits, real-time KYC scanners, and non-compliance fines of ₦10 million per breach. Notably, exemptions previously granted to embassies and donor agencies have been removed, signaling a tougher stance on cash oversight.
Dual Connectivity for POS Terminals
The second directive requires all POS terminals to connect simultaneously to both the Nigeria Inter-Bank Settlement System (NIBSS) and Unified Payment Services Limited (UPSL). This dual connectivity is designed to eliminate reliance on a single aggregator, a major cause of past transaction failures and outages.
With POS devices handling over 40% of retail transactions in Nigeria, the policy promises greater resilience and reliability. Acquirers and Payment Terminal Service Providers (PTSPs) must comply within 30 days, with mandatory failover tests and audit trails to ensure seamless switching during downtime. Non-compliance could result in sanctions, including terminal deactivation.
Opportunities and Challenges
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For SMEs: Unlimited deposits will ease cash inflows, but withdrawal caps may strain liquidity for cash-heavy sectors. Digital alternatives like QR codes and invoice financing could help bridge the gap.
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For Banks: Reduced cash-handling costs and stronger AML tracking will improve efficiency and oversight.
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For Rural Areas: The policies may pose challenges due to limited infrastructure. Solutions such as USSD expansions and subsidized solar-powered POS devices could mitigate exclusion risks.
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For Consumers: Reliable POS transactions will boost confidence in digital payments, though short-term disruptions may occur during rollout.
Long-Term Implications
These reforms align Nigeria with global cashless economy trends, strengthening financial stability while promoting digital adoption. Although stakeholders face short-term strains—such as upgrade costs and liquidity squeezes—the long-term benefits include reduced fraud, improved transaction reliability, and enhanced economic fluidity.
The CBN’s bold steps reflect a strategic pivot toward a more resilient, transparent, and digitally driven financial ecosystem. For businesses and individuals, the message is clear: embrace digital channels, upgrade systems, and prepare for a future where cash plays a smaller role in Nigeria’s economy.