Nigeria Introduces New Fintech Compliance Rules: Only CBN-Licensed Payment Firms Allowed to Collect Electricity Revenue

The Federal Government has introduced sweeping reforms to the electricity payment system, directing that only financial institutions and payment companies licensed by the Central Bank of Nigeria may collect electricity bills on behalf of distribution companies. The move follows the release of the Nigerian Electricity Regulatory Commission’s new Guidelines for the Engagement of Third-Party Collection Service Providers in the Nigerian Electricity Supply Industry.

The directive, which takes effect on November 1, 2025, aims to eliminate unregulated collections, strengthen transparency, and curb revenue leakages that have long affected the power sector. Electricity distribution companies have been ordered to revalidate every existing collection partner before December 31, 2025, or face regulatory sanctions.

Signed by the NERC Vice Chairman, Musiliu Oseni, the guidelines create a uniform structure for electricity bill payments across all platforms, including USSD, mobile banking applications, PoS terminals, digital wallets, agent banking outlets, and rural payment points. The policy is also expected to reinforce Nigeria’s longstanding transition to a cashless electricity billing system.

Despite previous mandates requiring industrial, commercial, and meter-demand residential customers to migrate to cashless channels in 2020, cash payments remained common—particularly in rural communities. Many unregistered agents continued charging unregulated fees, worsening liquidity challenges for distribution companies and distorting official collection figures.

Under the new rules, only banks, licensed payment service providers, switching companies, mobile money operators, card schemes, super-agents and other CBN-approved entities can function as Collection Service Providers. The guidelines set firm maximum commissions for all payment channels and prohibit arbitrary charges.

To qualify for registration, each service provider must submit a valid CBN licence, an executed agreement with the partnering distribution company, CAC incorporation documents, a banker’s reference, three years of tax clearance, VAT registration, a list of sub-agents, API integration approval from NIBSS, and proof of payment of a non-refundable N100,000 registration fee. No entity may operate without NERC’s formal clearance.

NERC categorised eligible payment channels into USSD, banking and switching platforms, digital mobile services, agency banking outlets, kiosks, PoS terminals and rural collection services. Each channel is now subject to regulated commission caps designed to protect consumers from inflated charges.

The new permissible rates include N20 for USSD payments below N5,000 and N50 for transactions of N5,000 and above. Digital wallet, mobile service, agency, PoS, kiosk and rural agent transactions will attract between 0.75 per cent and 3.25 per cent per transaction, subject to hard caps ranging from N2,000 to N5,000—whichever is lower. Additional charges for unrelated services such as IT support or marketing are strictly prohibited.

All collection agreements must be prefunded, except for banks and switching firms which will operate on a T+1 settlement cycle. Maximum Demand customers are excluded from third-party payments and must pay directly to the distribution companies’ designated accounts.

While the regulations are expected to reduce revenue leakages and strengthen liquidity for electricity companies, some agents fear that the new caps—especially the 3.25 per cent limit for rural operators—may force smaller players out of business in low-density communities.

With the December deadline approaching, distribution companies must urgently review and revalidate thousands of partnership agreements or risk enforcement measures under NERC’s compliance framework. The Commission warned that any collection service provider not fully registered by year-end will be barred from operating.

If fully implemented, the policy is projected to enhance transparency, boost digital payments adoption, and contribute to closing the long-standing revenue gap in Nigeria’s electricity supply industry.