NDIC Releases Deposit Insurance Guidelines On Mobile Payment

The Nigeria Deposit Insurance Corporation (NDIC) has released deposit insurance guidelines on mobile payments system (MPS), which is known as “Pass-Through Deposit Insurance scheme”.

The “Pass-Through Deposit Insurance scheme” is the protection provided by the NDIC to mobile money subscribers, whereby the Corporation insures funds that are deposited by a Mobile Money Operator (MMO) in the deposit money banks (DMBs).

The MMO acts as a custodian on behalf of the one or more subscribers who are actual owners of the funds as if those actual owners have deposits in the deposit money banks (DMBs).

Mobile Payments System (MPS) refers to payment services operated under financial regulation and performed through the use of mobile devices such as smart phones, cell phones, tablets, personal digital devices and other electronic devices.It is also a convenient, safe and affordable way by which subscribers make instant transfer of funds and execute payments for goods and services from anywhere at any time without having a bank account.

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The public policy objectives of the Pass-Through Deposit Insurance guidelines which form the framework for the scheme are as follows:

(a)  Guarantee the payment of insured sums to subscribers of MMOs in the event of failure of insured institutions where pool funds are maintained.

(b) Enhance confidence of subscribers and ensure continuity of the Mobile Payments System (MPS).

(c) Promote financial inclusion by protecting and ensuring the safety of the MPS; and

(d) Promote the stability of the Nigerian financial system.

Some of the salient elements of the NDIC Pass-Through Insurance consist of the following:

The subscribers of MMOs shall be insured up to the maximum coverage level of N500,000.00 per subscriber per Deposit Money Bank or the applicable coverage level for depositors in line with the NDIC Act.

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Subscribers’ funds in pool accounts and other deposits in the same institution under the same capacity shall be aggregated and insured up to the maximum coverage limit.

The relationship between the MMOs and their subscribers shall be based on Bare Trust Arrangement. (Bare Trust refers to an account where each beneficiary holds a separate share and is entitled to protection within the parameters of the scheme.)