Banks, fintech companies and other payment service providers operating in Nigeria have less than seven months to ensure that payment transaction data generated within the country is stored domestically after the Central Bank of Nigeria (CBN) introduced new data localisation requirements for the payments industry.
The directive, contained in a new circular on market structure, data localisation, beneficial ownership disclosure and systemic oversight measures in the Nigerian payments system, requires all regulated entities to ensure that payment-related data is hosted within Nigeria by January 1, 2027.
The move comes as Nigeria’s digital payments ecosystem continues to expand rapidly, generating trillions of naira worth of transactions and vast amounts of financial data each year.
According to data from the Nigeria Inter-Bank Settlement System (NIBSS), electronic payment transactions reached N284.9 trillion in the first quarter of 2025 alone, representing a 22% increase from N234.4 trillion recorded during the same period in 2024. Nigerians processed approximately N100 trillion in January, N88.8 trillion in February and N96 trillion in March through electronic payment channels.
The CBN said the new requirements were introduced in response to the “rapid evolution and growing dominance of digital payment services” and the increasing importance of payment service providers within Nigeria’s financial system.
The apex bank noted that developments in the industry have raised concerns around “systemic risk, market concentration, foreign dependency, and transparency of ownership and control.”
Push for data sovereignty
The localisation requirement represents one of the most significant regulatory interventions in Nigeria’s fintech sector in recent years and aligns with a broader global trend of governments seeking greater control over critical digital infrastructure and data.
Under the new rules, banks, fintechs, switching companies, payment processors, mobile money operators and other regulated participants must ensure that payment transaction data originating in Nigeria remains within the country’s borders.
While the CBN did not disclose how much Nigerian payment data is currently stored abroad, the directive is expected to affect companies that rely on foreign cloud infrastructure and overseas data processing arrangements.
Many fintech firms operating in Nigeria depend on global cloud providers for parts of their infrastructure, raising questions about potential migration costs, compliance timelines and the readiness of local hosting facilities to absorb additional workloads.
In July lats year, during the launch of Dabengwa Sifiso Data Centre, owned by MTN Nigeria, the telecommunication gaint, disclosed that Nigeria loses up to $850 million to foreign cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud, annually.
“Today, the three big hyperscalers—Amazon, Google, and Microsoft—take between $600 million and $850 million out of Nigeria annually,” Lynda Saint-Nwafor, Chief Enterprise Business Officer at MTN Nigeria, said.
Fintechs may face new compliance costs
Industry stakeholders are expected to closely examine the financial implications of the directive.
For larger institutions with existing local infrastructure, compliance may require limited adjustments. However, smaller fintech companies and startups that rely heavily on foreign-hosted cloud services could face additional expenses related to migration, redundancy, storage and security.
The policy could also create new opportunities for Nigeria’s growing data-centre industry as demand for local hosting and cloud capacity increases ahead of the 2027 deadline.
According to a September 2025 report, Nigeria has about 26 data centers (operational and planned), 77 percent of which are clusters in the country’s commercial hub, Lagos. Although this makes Nigeria the second-largest market in Africa, CBN new policy could significantly boost the continent’s data market, which was valued at $3.49 billion in 2024 and is projected to reach $6.81 billion by 2030.
Also Read: Why CBN is Restricting Banking Apps to One Device at a Time
More than a data rule
The circular extends beyond data localisation.
The CBN also introduced new market structure requirements aimed at reducing concentration risks within the payments industry.
- Under the framework, payment service providers controlling more than 25% market share in one segment of the payments value chain will face restrictions on participation in other segments, a move that could affect future expansion strategies for dominant players.
- The regulator additionally mandated stronger Ultimate Beneficial Ownership (UBO) disclosure requirements, requiring firms to provide greater transparency regarding individuals who ultimately own or control payment companies.
According to the CBN, the measures are intended to improve transparency, strengthen oversight and safeguard the stability of Nigeria’s rapidly expanding payments ecosystem.