A Professional Assessment of the Regulation of Digital Financial Services and Mobile Money in Northern Nigeria

Mobile money and digital financial services have transformed access to financial services in Northern Nigeria, where traditional bank branch penetration is lowest, yet the regulatory framework governing payment service banks, mobile money operators, and digital lenders creates compliance challenges that limit service expansion in the North East and North West zones. This study provides a professional assessment of the regulatory framework applicable to digital financial service providers operating in Northern Nigeria, focusing on CBN Payment Service Bank Guidelines, Know Your Customer requirements, consumer protection standards, and agent banking regulations. Data were gathered through interviews with managers of 10 licensed payment service banks and mobile money operators operating in Kano, Kaduna, Sokoto, Maiduguri, and Gombe, supplemented by CBN regulatory reports and NCC data on mobile internet penetration. Results indicate that tiered KYC requirements intended to facilitate low-income account access are inconsistently implemented, with many agents applying full-KYC requirements to all customers due to uncertainty about tiered compliance obligations. Consumer recourse mechanisms for failed transactions are inadequately known to rural customers. Islamic finance compatibility of mobile money products is legally uncertain in several Northern states. The study concludes that digital financial services regulation in Northern Nigeria requires simplified compliance guidance, culturally adapted consumer communication, and regulatory investment in agent network supervision. Recommendations include Arabic and Hausa consumer rights disclosure mandates and a CBN Northern Financial Inclusion Task Force.

Keywords: digital financial services, mobile money, payment service banks, Northern Nigeria, financial inclusion