On 6th October, 2025, the Central Bank of Nigeria (CBN) released comprehensive guidelines for agent banking operations, signalling a significant evolution in one of Nigeria?s most successful financial inclusion stories. This new directive consolidates all previous regulations into a single document while introducing stricter operational requirements to reshape how millions of Nigerians fundamentally access banking services.

The journey so far: From experiment to economic lifeline

Agent banking in Nigeria began as a modest experiment in 2013 when the CBN first issued guidelines allowing licensed financial institutions to partner with third parties to deliver basic banking services. The concept was both simple and revolutionary: to bring banking to where Nigerians live, work, and shop, rather than expecting them to travel to distant bank branches.

The impact has been transformative. Financial inclusion in Nigeria grew significantly, rising from 56% in 2020 to 64% in 2023, with agent banking serving as a primary driver of this expansion. Today, the familiar sight of Point of Sale (PoS) terminals at corner shops, petrol stations, and markets has become integral to Nigeria?s economic fabric. For millions in remote communities and underserved urban areas, the local agent represents their only meaningful connection to the formal financial system.

The introduction of super agents?institutions licensed by the CBN to develop and manage agent networks?in 2015 further accelerated this growth. This structure allowed banks and fintech companies to rapidly scale their reach without the overhead of direct management, as super agents focused solely on recruiting and managing these networks.

What has changed: The devil in the details

The new guidelines signal the CBN?s intent to professionalise and standardise an industry that has, at times, operated in regulatory grey areas. Several key changes stand out:

Ending Multi-Principal Agency

Perhaps the most controversial change is the mandate that agents must now be exclusive to one principal (bank or fintech) at any given time. Previously, agents commonly operated multiple terminals for different service providers, a practice that allowed them to maximise transaction volumes and income but which has now been outlawed, definitively reducing agents? earnings.

The ripple effects extend far beyond individual agents. Principals must now compete more aggressively to attract and retain agents, with competition likely focusing on commission structures, technical support quality, liquidity management, and brand strength. Principals are expected to sweeten their offers with higher commissions, faster dispute resolution, better training, and a more robust technology infrastructure.

However, a significant constraint is embedded in the new contract terms. Section 5.4 of the guidelines stipulates that ?an Agent is not allowed to be appointed by another Principal (directly or indirectly) until the expiration of any existing Agent Banking Agreement.? This contractual lock-in means that agents who sign with a single principal are bound to that agreement for its entire duration, which could be one, two, or more years.

An agent dissatisfied with their principal?s commission structure or service quality cannot simply switch to a competitor. They must either wait out the contract, negotiate an early termination (with potential penalties), or breach the agreement, which risks blacklisting from the entire agent banking ecosystem. This gives principals significant leverage, potentially dampening the competitive pressure that exclusivity was intended to create. For the principals themselves, exclusivity also translates to reduced transaction volumes and revenues from agents who once served multiple platforms.

Transaction limits and monitoring

The introduction of a daily cash-out limit of N1.2 million per agent, combined with individual customer limits of N100,000 daily and N500,000 weekly, introduces significant constraints that will hit certain agents much harder than others.

In major commercial hubs like Balogun Market, Alaba International Market, and Computer Village in Lagos, where agents serve as the primary banking infrastructure for traders dealing in high-value goods and large cash flows, the N1.2 million daily limit becomes an operational straitjacket. For instance, an agent in Alaba Market serving electronics traders who routinely handle transactions of N500,000 to N2 million for wholesale purchases could exhaust most of their daily capacity by mid-morning with a single large withdrawal. This forces other customers to seek services elsewhere and results in lost income for the agent. The constraints are equally severe in industrial areas, transport hubs, and markets dealing with large volumes of construction materials, automotive parts, or agricultural produce.

In contrast, the limit is largely theoretical for agents in residential neighbourhoods or rural communities where typical transactions involve salary withdrawals, bill payments, and small retail purchases, as they may process 30 transactions daily without approaching the N1.2 million threshold.

The individual customer limits compound the problem. A trader needing N500,000 to restock inventory must now split the withdrawal across five days (due to the N100,000 daily limit) or find five different customers to withdraw cash on their behalf. While workaround-friendly, this practice defeats the purpose of transaction monitoring and opens doors to structured transactions designed to evade detection.

Yet, this constraint may inadvertently accelerate the adoption of digital payments. Traders who previously insisted on cash-only transactions now face a choice: navigate cumbersome withdrawal limits or begin accepting bank transfers directly from suppliers and customers. For a market ecosystem long resistant to digitisation, these limits could prove more effective at driving cashless transactions than years of government advocacy, though the question remains whether this forced digital migration will be embraced or circumvented.

The new guidelines also require that transactions flow through the principal?s dedicated agent accounts. Principals are mandated to electronically report daily transactions, withdrawals, and balances to the Nigeria Inter-Bank Settlement System (NIBSS) and the CBN. Agents operating outside designated accounts would face personal liability for fraud and risk contract termination and blacklisting. The guidelines further mandate that principals monitor ?accounts associated with the agents? Bank Verification Numbers (BVNs) with a view to identifying agent banking activities which may be conducted outside the designated account(s).

The major market players, such as Opay, Moniepoint, and Palmpay, should already have the technical capability for this robust monitoring. The real vulnerability lies with smaller, less technologically sophisticated principals who may lack comprehensive BVN-linked account monitoring infrastructure, exposing them to substantial regulatory fines for failing to implement robust systems. Agents might also exploit cash-pooling arrangements with other agents or use family members? accounts to circumvent limits, though such practices carry the risk of contract termination and blacklisting if detected.

Implementation of the reporting requirements would require the development of an API, data standardisation, and system interoperability. Principals must capture and transmit transaction values and agents? BVNs, TINs, geo-coordinates, and balances daily. Late submissions attract steep penalties of N2 million plus N250,000 daily. This could prove prohibitively expensive for smaller fintechs and microfinance banks lacking sophisticated IT infrastructure.

However, Nigeria?s emerging open banking framework could help mitigate these challenges by promoting standardised APIs, enhancing data sharing, and reducing integration costs across financial institutions. This interoperability reduces duplication, lowers compliance costs, and ensures that smaller players can meet regulatory reporting obligations without overhauling their legacy systems. With regulated third-party service providers facilitating data connectivity, institutions can automate daily submissions of BVNs, TINs, and geo-coordinates more efficiently and accurately.

Paradoxically, this enhanced surveillance may drive transactions underground. Traders needing to move amounts exceeding limits might revert to cash couriers?trusted individuals physically transporting large sums for a fee or digital transfers. Traditional market financiers, who maintain substantial cash reserves and can provide immediate large cash withdrawals in exchange for bank transfers to their accounts, may see renewed demand, effectively functioning as unregulated cash-out points that bypass agent banking limits entirely. By making formal agent banking more restrictive, the CBN risks strengthening the informal cash economy it sought to displace.

Geographical restrictions and compliance

Devices must now be geo-fenced to operate only at registered agent locations. While this addresses the issue of agents conducting business at unauthorised locations, it reduces flexibility and may prove technically challenging in areas with poor GPS accuracy.

The new framework also demands significantly more documentation and verification from agents, including biometric data collection, GPS coordinates, and linking Tax Identification Numbers with devices. Furthermore, super agents must maintain at least 50 agents spread across all six geopolitical zones. This is a requirement that could squeeze smaller players out of the market. Critically, the guidelines fail to specify the distribution, meaning a super agent could theoretically deploy 45 agents in Lagos and one token agent in each of the remaining five zones, satisfying the letter of the requirement while concentrating operations in profitable urban centres. This is viewed as a missed opportunity to enforce genuine geographical diversity and ensure financial inclusion reaches underserved regions.

The financial inclusion question: Progress at what cost?

The broader question is whether tighter regulation will help or hinder Nigeria?s financial inclusion objectives. On the positive side, the emphasis on consumer protection, dispute resolution mechanisms (complaints must be resolved within seven working days), and mandatory agent training should improve service quality. Enhanced Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance also aligns Nigeria more with international best practices.

However, legitimate concerns about unintended consequences exist. The exclusivity requirement may reduce competition and increase customer charges as agents lose the ability to shop for the best commission structures. Smaller agents operating on thin margins may find the operational restrictions, from geo-fencing requirements and dedicated account mandates to the reduced income from serving only one principal, forcing them to exit the market altogether.

The geographical distribution requirement for super agents could create perverse incentives, forcing them to maintain uneconomical operations in low-transaction areas simply to meet regulatory thresholds, which might reduce rather than expand rural access to financial services. A more balanced approach, like the Central Bank?s Guidelines for Licensing and Regulation of Payment Service Banks (PSBs), which mandate that PSBs operate mostly in rural and unbanked locations, with not less than 25% of their financial service touchpoints in these areas, could have been adopted. Additionally, adding regulatory compliance costs to existing pressures like fraud, robbery, and insecurity could make agent banking economically unviable for many operators, particularly in high-risk areas where services are most needed.

Looking ahead: Higher barriers and consolidation

The new guidelines will likely trigger consolidation amongst established players, as the sector is already dominated by three major fintech companies with the capital, technology, and operational sophistication to absorb compliance costs. The guidelines also dramatically raise barriers to entry, making it nearly impossible for new players to break into the market. Building the compliance infrastructure, from funding biannual training programmes to developing sophisticated BVN monitoring systems and NIBSS reporting capabilities, requires substantial upfront investment that nascent fintechs simply cannot afford.

Unestablished players operating at the margins will struggle to justify the costs, likely forcing them to exit or remain perpetually small. For individual agents, particularly those who thrived by serving multiple principals, the choice is stark: align exclusively with one of the big three or leave the business. The result will be a more concentrated market where a handful of well-resourced players dominate, innovation from smaller entrants slows, and the competitive pressure that drives down costs diminishes.

However, a more structured, professional agent banking sector with higher entry barriers could ultimately prove more stable and reliable for customers. The emphasis on proper training, consumer protection, and fraud prevention addresses real problems that have plagued the industry?s explosive growth phase.

The CBN has set an ambitious target of achieving 95% financial inclusion. Whether these new guidelines represent a necessary maturation of the agent banking model or regulatory overreach that will slow financial inclusion momentum remains to be seen. What is certain is that Nigeria?s grand experiment in democratising financial services has entered a new chapter. The coming months will reveal whether tighter regulation can coexist with the innovation and accessibility that made agent banking a success story, or whether the cost of compliance will price the financially excluded back out of the system the industry was designed to serve. The CBN?s challenge now is to enforce standards without strangling the very innovation that brought banking to Nigeria?s grassroots. (BusinessDay)

Update news