Central Bank Releases Framework for Quick Response Code Payments
The Central Bank of Nigeria, CBN, has released framework for quick response (QR) code payments in furtherance to its mandates to ensure safety and stability of the financial system.
In a report released on its website today, the CBN said it issued the framework as part of its oversight function in promoting the use, adoption of electronic payments and foster innovation in the payments system.
According to CBN, these codes can be used to present, capture and transmit payments information across payments infrastructure.
It said the technology further enables the mobile channel to facilitate payments and presents another veritable avenue for promoting electronic payments for micro and small enterprises.
Explaining, the CBN said quick Response (QR) Codes are a kind of matrix barcode representing information presented as square grids.
It is made up of black squares against a contrasting background that can be scanned by imaging device, processed and transmitted by appropriate technology.
CBN explained that the framework provides regulatory guidance for the operation of QR Code payment services in Nigeria.
It aims to ensure the adoption of appropriate QR code standards for safe and efficient payments services in Nigeria.
The framework therefore stipulates acceptable QR Code Standards for implementing QR Payments in Nigeria; interoperability, roles and responsibilities of participants and risk management principles for QR code Payments in Nigeria.
The report stated that QR code payments in Nigeria shall be based on the EMV® QR Code Specification for Payment Systems.
In addition, it stated that the Bank may also approve the implementation of any other QR Code Standard, provided it meets the prescribed security requirements within the framework, and demonstrates interoperability with other existing implementation in the industry and/or cost benefits to end-users (merchants and customers).
Meanwhile, CBN hinted that QR Code Payments implementation in Nigeria shall support account, wallet, card and token based QR code operations.
Implementation of QR Code for payments in Nigeria shall be based on the Merchant-presented mode (where merchants present the QR Code for buyers to accept in order to conclude payment transactions) specification.
The apex bank listed participant to include Merchants, Customers, Issuers which may be Banks, MMOs and Other Financial Institutions, Acquirers (Banks, MMOs and Other Financial Institutions) and Payments Service Providers.
In addition to this, CBN also released Framework for Regulatory Sandbox Operations also to ensure the safety and stability of the Nigerian Financial System, among other things.
It is also to promote the use and adoption of electronic payments and foster innovation in the payments system.
The CBN released the structure on its website on Wednesday and said one of the objectives was to increase the potential for innovative business models that advance financial inclusion.
The bank explained that it came up with the structure to ensure new and more flexible ways of engaging with the banking industry.
This, it said, is in view of increasing consumer appetite for payment solutions and emerging disruptive technology in the financial services space.
It said that the structure would enable the Bank stay abreast of innovations while promoting a safe, reliable and efficient Payments System to foster innovation without compromising on the delivery of its mandate.
“This framework, therefore, defines the establishment, rules and operations of a regulatory sandbox for the payments system to promote effective competition, embrace new technology, encourage financial inclusion and improve customer experience, with a view to engendering public confidence in the financial system,” it said.
The bank explained also that the structure was to reduce time-to-market for innovative products, services, and business models.
According to CBN, the framework will increase competition, widen consumers’ choice and lower costs.
It also said that it would ensure appropriate consumer protection safeguards in innovative products.
The CBN said that the structure would clearly define the roles and responsibilities of stakeholders and the operations of the Sandbox for the Nigerian Payments System industry.
The apex bank added that the framework would ensure adequate provisions in regulations to create an enabling environment for innovation without compromising on safety for consumers and the overall payments system.
Besides, it said that it would provide an avenue for regulatory engagement with FinTech firms in the payment space, while contributing to economic growth.
Read Also: ‘Foreign Exchange Rates to Converge When CBN Begins Full Intervention’
Central Bank Releases Framework for Quick Response Code Payments
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