August 27, 2028/CSL Research
The Central Bank of Nigeria (CBN) has mandated all participants in the payment ecosystem—including banks, mobile money operators, switches, payment service providers, and super-agents—to fully migrate to the ISO 20022 messaging standard and implement mandatory geo-tagging of payment terminals. According to the CBN circular issued on 25 August 2025, all domestic and cross-border payment messages must comply with ISO 20022 and include mandatory data fields such as payer/payee and merchant/agent identifiers. Full compliance is required by 31 October 2025.
On geo-tagging, the CBN now requires all new and existing Point-of-Sale (PoS) devices to have native geolocation capability with dual-frequency GPS. Each device must be registered with a Payment Terminal Service Aggregator (PTSA) and tagged with the precise latitude and longitude coordinates of the merchant or agent location. Devices must also be certified against the National Central Switch (NCS) geo-location software development kit (SDK), which enforces geofencing within a strict 10-metre radius of merchant activity. Furthermore, transaction location must be captured at initiation and embedded in the message payload, while all new devices are to be geo-tagged before activation.
The significance of this policy shift lies in its potential to tackle fraud and insecurity in the Nigerian financial system. ISO 20022’s structured and detailed data format provides better payer and payee identification, improves fraud analytics, and strengthens anti-money laundering (AML) and counter-terrorism financing (CFT) monitoring. When combined with geo-tagging, the framework can help prevent fraudulent practices such as terminal cloning, merchant spoofing, agent roaming, and cash-out scams. By enforcing strict location data capture, regulators and law enforcement agencies will have higher-quality transaction trails,
enabling more effective dispute resolution and faster investigations.
Beyond security, the directive also offers broader systemic benefits. Adoption of ISO 20022 aligns Nigeria’s payment infrastructure with global SWIFT standards, improving cross-border interoperability and reducing integration costs for fintechs. Similarly, geo-tagging will provide policymakers with valuable insights into merchant and agent distribution, supporting efforts to close financial inclusion gaps. Nonetheless, implementation challenges remain.
Upgrading PoS devices to meet requirements such as Android v10 and dual-frequency GPS will increase costs for smaller providers and merchants. Connectivity gaps in rural areas could also hinder real-time location capture, while the tight compliance timeline raises the risk of integration bottlenecks, testing delays, and service disruptions.
To mitigate these risks, a phased migration strategy could be adopted, starting with high-volume merchants and agents with known location inconsistencies. The CBN, working with industry stakeholders, could also introduce device financing schemes to ease the burden on smaller merchants, alongside training programs and remote software updates to support smoother adoption. Ultimately, this directive represents a critical step toward building a safer, more transparent, and globally integrated payment ecosystem in Nigeria. Its success, however, will depend on disciplined execution, industry-wide collaboration, and strong
governance structures to ensure compliance.
Click here to download full report: CSL Nigeria Daily – 28 August 2025 – Financial Services.pdf
