The Nigeria Inter-Bank Settlement System (NIBSS) has launched a revolutionary payment system aimed at transforming instant payment in Nigeria. The new payment system, called National Payment Stack (NPS), "was built to prepare Nigeria for the future of digital payments," said the Managing Director of NIBSS, Mr. Premier Oiwoh.
The NPS was built on the foundation of NIBSS Instant Payments (NIP) which was introduced in 2011 (that's about 14 years ago) as Africa’s pioneering real-time, and account-based digital payment system. The NIP is a centralized network operated by NIBSS that ensures near-instantaneous clearing of transaction.
Oiwoh stated, “we’re moving toward the future with NPS. This isn’t just another instant payment solution; it’s the cornerstone for Nigeria’s financial evolution.” In addition to what the NIBSS MD unveiled during the launch event in Lagos, Nigeria, here are some of the features of the National Payment Stack (NPS) and how the payment solution works.
How NPS Works in NIBSS
1. Real-Time Payment and Instant Settlements
The feature works in the sense that funds are transferred from the payer’s bank account to the payee’s bank account almost immediately, with finality (that is, it's an irreversible settlement) that occurs within seconds.
Now, let's take for instance, a customer initiates a fund transfer maybe through bank mobile app, USSD code, POS, or other digital payment channel. The customer's bank will verify the transaction, checks for sufficient balance, and sends a payment instruction to NPS payment.
Upon the payment instruction getting to the NPS platform, that's where the real-time and instant settlement occurs. The NPS platform will process the transaction individually using the NIBSS Instant Payments (NIP), a centralized network operated that ensures near-instantaneous clearing.
However, it's important to note that the payment instruction received from payer's bank was previously processed through Automated Clearing House (ACH), a traditional payment system that processes electronic transactions between bank accounts in batches. Unlike real-time transaction and instant payment settlement, ACH transactions take 1 to 3 days to clear and settle because they’re grouped and processed at specific times, not in real time.
Once the payment instruction is received and processed instantly, both the customer (payer) and merchant (payee) will receive immediate confirmation through their preferred method such as SMS, app push notification, email that the transaction is complete.
In a nutshell, the real-time transactions and instant settlements serve as a core mechanism or rail that lets NPS operate as a modern payment infrastructure that facilitates direct, and account-to-account transfers between banks and financial institutions in real time.
2. ISO 20022
The ISO 20022 is an advanced payment messaging standard that makes transactions faster, clearer, and more reliable. The ISO 20022 allows detailed data, like invoice numbers or payee details to be included with each payment on NPS. This helps in reducing errors and manual work.
The ISO 20022 works contrary to the older systems which has limited data fields. The NPS’s use of ISO 20022 ensures every transaction carries rich information that makes it easier for businesses and banks in Nigeria to track and reconcile payments instantly.
This standard enhances NPS by supporting seamless, real-time communication between banks, fintechs, and users, even for complex transactions like B2B payments. It also paves the way for future features, like cross-border payments within Africa, while improving transparency and security.
3. Bulk and Single Payments on One Rail
The NPS also supports both bulk and single payments on a single payment rail. Single payments, like sending money to a friend or paying a merchant, are processed instantly in real time, and Bulk payments, like salaries or vendor payouts, are grouped and processed efficiently on the same infrastructure.
This unified rail simplifies operations for banks, fintechs, and businesses by handling diverse payment types—P2P, B2B, or government transactions—on one platform. It cuts costs, speeds up settlements, and supports Nigeria’s cashless economy, making it easier for SMEs and individuals to manage payments.
other features NPS offers include:
- A highly efficient Dispute Management system that swiftly resolves transaction concerns, complemented by enhanced fraud detection and risk rating capabilities to ensure robust security.
- NPS also incorporates KYC verification through BVN, RC Number, or TIN to uphold stringent compliance standards.
- The payment system provides Request-to-Pay and Direct Debit functionalities to streamline payment collections.
- It is equipped for Multi-Currency Transactions and holds cross-border potential. This aligns with initiatives like PAPSS to support Africa’s 42 currencies.
Furthermore, its sandbox-enabled integration allows partners to develop and deploy solutions in as little as 48 hours, which helps in facilitating seamless collaboration for financial institutions and fintechs.
In a nutshell, all these NPS features and benefits helps in reducing reliance on separate systems like ACH, and modernizes NPS from NIP’s 2011 framework. As part of Oiwoh's statement in the launch event, NPS is built to spur innovation in digital payments, enhance financial inclusion across the ecosystem, and streamline government social welfare disbursements, tax collections, and revenue management.
