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What Is NIBSS? An Explanation

What is NIBSS? An explanation

Chances are you’ve probably heard someone mention NIBSS sometime this year. We’re even willing to bet our entire PiggyVest savings that you heard the word during or after an NIBSS service downtime. But what exactly is NIBSS? How does it work? And how do its notorious downtimes affect you and your money?

NIBSS (Nigeria Inter-Bank Settlement System Plc) is an industry-owned firm that develops and handles the infrastructure for payments between different banks in Nigeria. It’s owned by all licensed banks in the country (including the CBN) and is the reason inter-bank transactions are seamless.

This article is a complete guide to the NIBSS. Here, we’ll cover the company’s function and history. We’ll also provide definite answers to questions you might have about how it works in Nigeria.

History of NIBSS

In our article on ways to check your BVN online, we mentioned that NIBSS partnered with the Central Bank of Nigeria (CBN) to create, issue and manage Bank Verification Numbers (BVNs) way back in 2014. While that move helped centralise Nigeria’s bank verification system (and push NIBSS into the limelight), the company has been around (and kicking) since the last century.

The company was formed and registered in April 1993 on the directive of the Bankers Committee and is owned in equal parts by every licensed bank and discount house in the country — including the CBN.

However, NIBSS didn’t commence operations until June 1994 — more than a year after its incorporation. Since then, the company has become one of the most essential institutions in Nigeria — with operations and infrastructure that make Nigeria’s banking system what it is today.

Overview of NIBSS

What is NIBSS? An explanation — Overview of NIBSS
What is NIBSS? An explanation — Overview of NIBSS

NIBSS operates by accessing customer account reports and having banks send financial transaction data through secure online networks. This process aligns with the mandates defined for the broader Nigerian financial sector and outlined in the company’s Memorandum and Article of Association.

Below is an overview of the NIBSS’s mandate:

  • To carry on business as a service-oriented institution that provides the mechanism for same-day clearing and settlement of inter-bank transfers and payments.
  • To provide infrastructure for the automated processing and settlement of transactions between banks acting on their own account regarding deposit placements, Treasury Bills Transaction, Naira settlement on inter-bank foreign exchange transactions.
  • To initiate and develop an integrated nationwide network for electronic or paperless payments, funds transfer and settlement of transactions.
  • To provide a framework for elevating the general level of efficiency in funds transfer services.

This mandate guides all the activities of the NIBSS and dictates the services the company renders in Nigeria.

Today, NIBSS has top-notch technology infrastructure and security measures to provide payment and settlement services that are among the best in the world. It also effectively reduces operational and credit risks in funds transfer between financial institutions.

Without the NIBSS, banking in Nigeria would be slow and stressful — whether you’re using a regular bank or a reliable fintech app like Pocket by PiggyVest. In fact, if not for the company’s infrastructure, inter-bank transfers (usually almost instantaneous these days — especially if you’re using PocketApp) would take hours or even days to process.

What is NIBSS used for?

Most people know NIBSS as a platform that simplifies inter-bank transfers in Nigeria — which is true — but the company offers many services to achieve that goal. 

Here’s a full list of the services NIBSS offers:

  • Payment Services: These include solutions like NIBSS Pay, EPCCOS, NACS (Cheques) and NIBSS Instant Payment
  • Collections: The collection services NIBSS offers are mCash+, Central Pay, e-BillsPay, NIBSS Direct Debit (NDD), NIBSS Universal Switch and NQR.
  • Data and Identity Services: These include Name Enquiry, VerifyNow, USSD Validation Services and Bank Verification Number (BVN).
  • Nigeria Central Switch: NIBSS works as a regulator — ensuring that your cards work everywhere and payment switches (the “traffic controllers” for electronic payments — directing them safely between payers, merchants, and banks) function efficiently. The company also ensures there’s seamless connectivity and compatibility for modern electronic retail payments in the country.
  • Special Projects: These projects include sub-services like Global Standing Order (GSI), Biometrics and Pay Africa (Cross Border Payments) that improve the banking sector.
  • Payment Terminal and Application Certification: NIBSS manages the Terminal Management System (TMS) for all payment terminals (including POS terminals and ATMs) in Nigeria. This service enables the company to oversee and monitor all payment and transaction performance while ensuring infrastructure alignment with shared industry goals.

In the next section, we’ll see how NIBSS works when you transfer money between banks in Nigeria.

How does NIBSS work?

What is NIBSS? An explanation — How does NIBSS work?
What is NIBSS? An explanation — How does NIBSS work?

Let’s start by clearing up a popular misconception. Bank transfers don’t work like letters, text messages or notes. Your money doesn’t automatically jump into a receiver’s account every time you initiate an inter-bank transaction (even if it seems like it does).

Instead, the NIBSS processes these transactions — sort of like a middleman.

Let’s say you want to send money from your Pocket by PiggyVest account to a traditional bank to pay for a new pair of shoes. NIBSS receives the money from your bank after you’ve initiated the transaction. Then, it settles the recipient’s bank to complete the payment.

This simple two-step process is usually completed immediately. However, it’s only possible thanks to NIBSS’s modern world-class infrastructure that handles transactions and removes potential funds transfer and settlement bottlenecks (like limited banking hours and manual verification issues).

Is NIBSS used for transfers within the same bank?

NIBSS isn’t always involved in transactions happening within the same bank. Instead, the bank involved simply manages the transfer by subtracting from the sender’s account and adding to the receiver’s account — just like you’d expect.

However, this process isn’t always as straightforward as described above, and every bank handles internal transactions differently.

Who owns NIBSS?

What is NIBSS? An explanation — Who owns NIBSS?
What is NIBSS? An explanation — Who owns NIBSS?

As we mentioned, Nigeria Inter-Bank Settlement System Plc (NIBSS) is equally owned by the CBN and all licensed Deposit Money Banks (DMBs) and discount houses in Nigeria. The CBN’s Deputy Governor of Financial System Stability serves as the company’s board chairman, with bank representatives serving as directors and executive directors.

There’s also a managing director who leads the organisation’s executive management group.

Which banks use NIBSS?

Every bank and financial institution in Nigeria uses NIBSS for their operations. The company also offers its services to regulators (like the CBN and NDIC), primary mortgage institutions, private switching companies and super agents.

Private switching companies (like Paystack and Flutterwave) are an essential part of Nigeria’s fintech and payments space. They serve as middlemen that help to safely and efficiently move electronic payments between businesses, banks and payment networks. Without the NIBSS, many fintech solutions wouldn’t exist as they do today.

Super agents like Interswitch and Paga are go-betweens (or helpers) who make it easier for people to use financial and telecom services. They do this by working with smaller agents (like the POS agents that became billionaires during the 2023 cash scarcity) to extend these critical services to more places.

You can find a comprehensive list of the company’s partners by visiting their official website.

What are the benefits of NIBSS?

What is NIBSS? An explanation — What are the benefits of NIBSS?
What is NIBSS? An explanation — What are the benefits of NIBSS?

Banking has become almost futuristic in Nigeria, and payment processes have become more accessible — thanks to cardless solutions like debit cards, USSD-based mobile banking, POS systems (like the Patronize Pay Point device) and internet banking. These wouldn’t be possible without NIBSS’s infrastructure.

There’s also the matter of payment simplification.

NIBSS is why (despite the millions of transactions happening in the country per minute as well as the many checks, rules and licences needed for a single payment) you can send your last ₦2k, big ₦500k or uncountable millions without wahala.

How do you contact NIBSS?

You can contact NIBSS by visiting the Abuja office at Samuel Ademulegun Ave. Central Business District or the Lagos office at Plot 1230, Ahmadu Bello Way, Bar Beach, Victoria Island.

You can also reach out via these channels:

Ensure you only use these channels when contacting NIBSS. Remember: Always be careful when dealing with forms or platforms requiring a BVN to avoid losing funds or compromising your identity.

Conclusion

Nigeria Inter-Bank Settlement System Plc (NIBSS) is an integral part of Nigeria’s financial technology landscape and the reason your bank (and PiggyVest) accounts work so well. This article is an excellent guide to learning about NIBSS. You should bookmark it for later!

View Article Sources

The articles on the PiggyVest Blog are developed by seasoned writers who use original sources like authoritative websites, news articles and academic journals to perform in-depth research. An experienced editor fact-checks every piece before it is published to ensure you are always reading accurate, up-to-date and balanced content.

  1. Crunchbase: Nigeria Inter-Bank Settlement System
  2. NIBSS: Nigeria Inter-Bank Settlement System

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