Fraud: CBN orders multi-factor authentication for foreign cards, tightens rules on FX transactions

The Central Bank of Nigeria (CBN) has ordered banks and other financial institutions to introduce multi-factor authentication (MFA) for transactions conducted with foreign-issued payment cards, in a key move to strengthen security, curb fraud and improve the experience of tourists and Nigerians returning from abroad.

The directive is contained in a circular dated December 18, 2025, issued by the CBN’s Financial Policy and Regulation Department and signed by its Director, Dr Rita I. Sike. Titled “Facilitation of Seamless Use of Foreign Cards,” the circular sets out new operational, compliance and consumer-protection requirements for banks, payment service providers and merchants nationwide.

Under the new framework, MFA will be compulsory for all withdrawals and online transactions using foreign-issued cards that exceed $200 per day, $500 per week, and $1,000 per month, or their naira equivalents. The apex bank said the measure is designed to enhance transaction safety while ensuring a smoother payment experience for visitors and returning Nigerians.

“All banks and non-bank financial institutions are required to implement multi-factor authentication for all withdrawals and online transactions exceeding $200 per day, $500 per week, and $1,000 per month (or its equivalent),” the circular stated.

Beyond authentication, the CBN directed banks and non-bank acquirers to guarantee uninterrupted access for holders of foreign-issued cards, allowing them to withdraw cash, make payments and complete transfers in local currency across Nigeria. Institutions were also instructed to maintain high system availability to ensure seamless processing of card transactions at all times.

The regulator further emphasised strict compliance with global card association standards. Payment terminals, it said, must carry the appropriate certifications or timely renewals to prevent transaction failures and service disruptions. In addition, all merchant payments arising from foreign card transactions must be settled strictly in naira, while financial institutions are required to maintain sufficient liquidity to meet settlement obligations promptly.

To tackle fraud risks, the CBN ordered the deployment of robust transaction-monitoring systems capable of detecting unusual or suspicious usage patterns involving foreign cards across all terminals. Merchants accepting foreign cards will now be subject to enhanced know-your-customer (KYC) and anti-money laundering (AML) checks.

Where transactions appear suspicious, merchants are required to request valid means of identification and ensure that card-present transaction receipts are properly signed. Such transactions must be promptly reported to the Nigerian Financial Intelligence Unit (NFIU) in line with existing regulatory requirements.

On pricing transparency, the CBN stressed that customers must be clearly informed of applicable exchange rates before any transaction is concluded. Exchange rates for foreign card transactions must align with the prevailing official market rate, while all charges must be disclosed upfront. Transactions, the apex bank said, should only proceed after customers have explicitly accepted the stated terms, with evidence of acceptance properly documented and retained.

The circular also introduced stricter rules on dispute resolution and chargeback management. Acquirers are required to organise quarterly training programmes for merchants and agent networks on dispute handling and chargebacks. They must also maintain robust, auditable chargeback management processes in line with card scheme rules and CBN guidelines, covering timely case intake, evidence collation, refund execution and post-incident analysis.

Complaints arising from foreign card transactions must be resolved within stipulated timelines, the regulator warned, noting that escalated cases referred to the CBN would attract sanctions where breaches are established.

For low-value transactions, the CBN directed that card readers should support contactless payment options to speed up processing and improve customer convenience.

Institutions were also instructed to retain comprehensive transaction records, including terminal approval slips, signed merchant receipts, and descriptions of items or services purchased, for a minimum of 12 months. Such records must be made available within 24 hours when requested by regulators.

The CBN advised tourists and Nigerians returning from abroad who encounter difficulties using foreign-issued cards to report such issues to its Consumer Protection and Financial Inclusion Department, accentuating its commitment to safeguarding users while deepening confidence in Nigeria’s payment system.