Nigeria caps payment market share, mandates local data hosting
The Central Bank of Nigeria has introduced strict market-share caps and data localisation mandates that will force major payment operators to restructure their businesses and require fintechs to overhaul their cloud infrastructure.
The Central Bank of Nigeria has issued new rules capping market concentration in the payments sector and mandating that all domestic transaction data be stored locally. The framework targets operators holding dominant positions across both card issuing and merchant acquiring, while also forcing a broad shift away from foreign cloud servers.
Under the new market-structure requirements, payment companies exceeding a 25% share in either card issuing or merchant acquiring over a rolling 12-month period will be barred from holding more than 15% in the other segment. The regulator is aiming to prevent dominant operators from leveraging their strength in one area to control the entire payment chain. Companies currently holding strong positions across both sides of the market will need to execute structural changes—such as divestitures or legal separations—well before the December 31, 2026 deadline.
Separately, the central bank requires all payment transaction data generated in Nigeria to be hosted on domestic servers by January 1, 2027. The regulator estimates the country currently spends roughly $850 million annually on offshore hosting, with nearly 90% of its data stored outside its borders. This shift will have uneven impacts across the financial industry.
Traditional commercial banks, which typically run core systems on local on-premise infrastructure, will mainly need to audit existing arrangements to comply. However, cloud-native fintechs and mobile payment providers face a heavier burden. These companies will likely need to migrate critical payment databases, renegotiate outsourcing contracts, and overhaul cybersecurity frameworks to meet the new local data protection requirements.
The circular also strengthens anti-money laundering oversight by requiring payment institutions to disclose their ultimate beneficial owners to the regulator upon request. Combined with upcoming monthly market-share reporting requirements—though the central bank has yet to issue the specific reporting templates—the rules signal a clear push for tighter systemic oversight. For investors and executives, the immediate priority is assessing current market shares and modelling the capital and corporate costs of the impending structural adjustments.
