CBN Unveils Revised Regulation for Direct Debit Scheme


Obinna Chima

The Central Bank of Nigeria (CBN) has issued the regulation for direct debit schemes in the country.

The regulation recognises the existing and emerging multichannel options (online platforms, instant payments,etc.) applied for direct debit instructions in Nigeria.

In the guidelines posted on its website wednesday, the CBN explained that the provisions of the regulation were harmonised with developments in the payments system since the release of the previous version.

Direct debit is a cash-less form of financial settlement which facilitates recurring payments. It permits the originator of the instruction, known as‘biller’ to collect amounts due from a payer through the Payer’s bank by leveraging an instruction or mandate provided by the payer.

It explained that an entity wishing to participate as a biller in the direct debit scheme would typically contact its bank or payment service provider.

The service may be deployed on channels provided by the biller through its bank or payment serviceprovider.

The process typically involves five parties –biller, biller’s bank, payer, payer’s bank and payment serviceprovider.

“A biller shall be an entity incorporated or registered by an appropriate authority to carry on business and shall be on-boarded to the direct debit scheme by a bank or payment service rovider after satisfactory due diligence.

“A biller shall obtain the mandate of the Payer through a platform provided by the Biller or its appointed agent/partner either in paper or electronic form, duly verified by the payer’s bank.

“A biller shall provide clear terms and conditions which shall be applicable to a Direct Debit payment arrangement between it and the payer,” it added.

It further stated that biller’s bank shall be a member of the clearing system or integrated with payment service providers that accept direct debit for processing.

“The payer shall execute a direct debit mandate in order to participate in the direct debit scheme.

“A payer may cancel a direct debit mandate at any time upon such notice to the biller as specified in the direct debit mandate provided that such cancellation shall not be effective until the end of the current billing cycle,” it added.