NIBSS and Zone partnership exemplifies regulators’ revolutionary engagement with blockchain technology, setting a precedent for the future of global payments
World first: Central Bank of Nigeria subsidiary NIBSS joins Zone Blockchain network.
LAGOS, Nigeria, Aug. 20, 2024 (GLOBE NEWSWIRE) — In a move that signals a significant shift in the global financial landscape, the Nigeria Inter-Bank Settlement System (NIBSS), a payments clearinghouse primarily owned by the Central Bank of Nigeria, has joined Africa’s first regulated blockchain network for payments, built by decentralized payments infrastructure company Zone of Nigeria. The partnership marks one of the world’s first instances of regulatory participation in a private blockchain consortium, potentially redefining how financial regulations and decentralization intersect globally.
The partnership involves NIBSS leveraging Zone’s blockchain network to enhance its Payment Terminal Service Aggregation (PTSA) operations. PTSA is a regulatory oversight function in Nigeria assigned to NIBSS that requires all payments made on Point-of-Sale (PoS) terminals to pass through an aggregator before reaching the cardholder’s bank for authorization. This arrangement ensures enhanced oversight and compliance with the Central Bank of Nigeria’s payment standards. This unprecedented move towards blockchain adoption demonstrates NIBSS’ progressive and innovative disposition, which became evident when NIBSS launched one of the world’s first instant remittance services in 2013. Hosting a Blockchain node on the Zone network and deploying relevant smart contracts will enable NIBSS to decentralize its PTSA function, eliminating the existing central point of failure in transaction routing while preserving and even enhancing the regulatory oversight and reporting capabilities required by the CBN directive on PTSA.
The Zone blockchain network counts some of Africa’s largest banks among its members and offers several key benefits, such as decentralized routing, which allows for the direct exchange of financial messages between participating banks without an intermediary. In addition, the network facilitates real-time settlement, ensuring instant finality of transactions and immediate value for each successful transaction. The Zone network’s automated reconciliation feature leverages the transparency and consistency of blockchain to continuously reconcile counterparties and preemptively resolve potential customer disputes in real-time.
This development represents an important step towards the integration of blockchain technology into the traditional financial sector, and could inspire similar initiatives from regulators around the world. NIBSS’s direct involvement in the Zone blockchain network demonstrates a new model of regulatory oversight, enabling real-time monitoring and more effective compliance enforcement. This partnership underscores the growing acceptance of blockchain technology in traditional financial services and highlights blockchain’s potential to gain buy-in from regulators, improve regulatory functions and achieve widespread adoption globally.
Prime Minister Oiwoh, Director General and CEO of NIBSS, commented: “These partnerships and collaborations with key industry players represent an important milestone in our mission to drive innovation and improve efficiency in the payments system. The strategic alliances will revolutionize the ecosystem, delivering improved operational efficiency, cost savings and greater financial inclusion, ultimately positioning Nigeria at the forefront of the global payments space.”
Obi Emetarom, CEO and Co-Founder of Zone, said: “This partnership with NIBSS is a testament to the transformative power of blockchain technology in the payments space and more broadly in the financial sector as a whole. It demonstrates how blockchain technology can enhance regulatory oversight functions while streamlining service provider operations and delivering delightful experiences for end users.“
As the world moves towards more digital and decentralized financial systems, this partnership is a powerful example of how traditional financial institutions and innovative new technologies can work together to shape the future of finance. Having a central bank subsidiary join a fintech-led blockchain consortium, along with other trends such as CBDC pilots and bank-led blockchain initiatives around the world, hint at the inevitable impact of blockchain on how people manage their money in the future.
About NIBSS
The Nigeria Interbank Settlement System (NIBSS) is the backbone of the Nigerian financial system, providing interbank payment and settlement solutions. NIBSS is committed to facilitating safe and efficient payment systems, thereby contributing to the stability and growth of the Nigerian financial sector.
About Zone
Zone is a regulated blockchain network that enables payments and acceptance of digital currencies. Its Layer-1 Blockchain network digitizes Fiat payments and enables the transition to digital currencies while connecting previously excluded financial institutions to a comprehensive payments ecosystem. Zone, Africa’s first decentralized payment network, allows participating institutions to connect directly with each other and conduct payment transactions without an intermediary while fully automating settlement, reconciliation, and dispute management. The company works with the brightest minds on the continent to lay the foundation for the decentralized future of financial services. Its mission is to connect every store of monetary value by harnessing the power of blockchain.
Contact: oosoba@zonenetwork.com
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