The New CBN Agency Banking Regulations - Key Considerations for Venture-Backed Fintechs

The new CBN Agency Banking Regulations represent a major regulatory development that warrants more than just an investor update. In our view, the new CBN Agency Banking Regulations should prompt a strategic conversation at the board level between venture capital investors and their fintech founders. This is especially true for venture-backed fintechs whose primary revenue comes from agent banking commissions. These regulations are particularly significant because, while they are primarily aimed at protecting customers, they also have a direct impact on revenue potential, operational risk, and the scalability of fintechs operating in Nigeria. We highlight some key considerations for venture-backed fintechs in Nigeria.

For more context, please see our update on Agency Banking vs. Deposit-Banking: Key Considerations for Fintechs and Agency Banking - The Fintech Play

1. Regulatory Framing

 With the new CBN Agency Banking Regulations, the CBN is signaling that agency banking is fundamentally a banking activity, with agents and super-agents acting as distribution channels to bring banking services closer to customers. The new CBN Agency Banking Guidelines clarify that agency banking is not a peripheral or standalone fintech initiative and that fintechs operating as principals are required to comply with the same regulatory obligations as traditional deposit-taking banks. Fintechs without a banking license are therefore limited to supporting roles, such as technology providers, payment processors, or super-agents. This framing runs throughout the new CBN Agency Banking Regulations and carries significant implications for fintechs, as a matter of regulatory risk and regulatory enforcement. 

2. Extraordinary Contractual Liability for Fintechs 

In clause 9.1.1., the new CBN Agency Banking Regulations provides that fintechs or banks acting as principals in agency banking relationships will be liable for all actions or omissions of agents, including unauthorised actions of agents in so far as they relate to agency banking services. Typically, a principal can disclaim liability to a third party if the principal can establish that the agent was not authorized to perform the action creating a risk or liability. With the new Agency Banking Regulations, the CBN is essentially removing the defence that a principal could invoke for unauthorized acts of its agents and making the principal liable for all acts done in the context of agent banking, even when the agent exceeds their mandate. The CBN is essentially redefining the concept of agency in regulatory terms, transforming it from a private law relationship into a compliance-based supervisory framework. Thus, customers may be able to recover losses from the principal even if the agent acted without authority. 

Case Study A: In a litigation matter, we represented a corporate client who had deposited funds with a banking agent. Instead of remitting the money to the bank, the agent used the funds for a personal necessity, intending to repay them but ultimately failing to do so. The principal bank refused to accept liability, while the agent claimed that a reference to the police station for criminal conversion violated her fundamental human rights.

Case Study B: In another matter, we represented a fintech company in a case where a super-agent refused to accept liability after one of its agents was robbed at gunpoint and physically harmed. The super-agent denied responsibility despite the contract clearly assigning liability to them.

3. Agent Exclusivity  

With the new CBN Agency Banking Regulations, banking agents can no longer act for multiple principals. The exclusivity rule has several material consequences for fintechs operating in agency banking in Nigeria. For example, the exclusivity rule will likely increase the cost and complexity of agent acquisition, as fintechs and traditional banks must now compete aggressively to secure high-performing agents in high-traffic locations. Each agent therefore becomes a strategic asset, and losing a key agent can materially impact transaction volumes, customer satisfaction, and revenue. 

4. Transaction and Cash Limits

The new CBN Agency Banking Regulations impose daily and per-customer limits on cash-in and cash-out transactions. For example, for cash-in transactions/deposits, each customer cannot deposit more than ₦100,000 in a single day through an agent. Over the course of a week, the total deposits cannot exceed ₦500,000. For cash-out transactions/ withdrawals, a customer cannot withdraw more than ₦100,000 in a single day through an agent. Over the week, the total withdrawals cannot exceed ₦500,000. From a practical standpoint, these limits will influence agent throughput and directly affect potential revenue per agent as high-frequency cash agents may reach their daily limits quickly, potentially capping revenue from cash transactions alone. 

5. Full Operational Responsibility

The new CBN Agency Banking Regulations places full operational and regulatory responsibility on fintechs acting as the principal in an agency banking relationship. Such fintechs are now responsible for training and capacity building for agents, customer protection, periodic reporting to the CBN, transaction security and integrity, enhanced due diligence and anti-money laundering compliance. Contractually, principals must formalize their relationship with agents through written agreements that clearly define roles, responsibilities, transaction limits, liability frameworks, and termination procedures. Fintech principals must also now maintain comprehensive records of agent registration, transactions, cash floats, and compliance activities. These new requirements can also increase reputational and regulatory risk, as principals are fully accountable for agent conduct and performance, making robust governance and oversight critical.  Non-compliance can result in fines, suspension, or revocation of agency banking approval, making governance and risk management core operational priorities.

6. Device Control and Geo-Fencing Rules

The new CBN Agency Banking Regulations require that any point-of-sale device deployed to an agent must be geo-fenced or tagged to operate only at the agent’s registered location. This means that agents cannot use point-of-sale devices outside the approved premises and ensures that all transactions can be traced to a specific, verified location. Before the geo-fencing rules, agents could use point-of-sales devices more flexibly, often outside their usual station. Some agents could operate in multiple locations or even take devices home to serve customers, thereby increasing transaction volume and commissions. In practical terms, the geo-fencing requirement limits the mobility of agents. Agents can no longer serve customers in multiple locations with a single device. As a result, fintechs may experience a reduction in transaction volumes and revenue, because some transactions that previously occurred outside the registered location may no longer be possible. 

7. Dedicated Agent Float Accounts

The new CBN Agency Banking Regulations require that principals maintain dedicated agent float Accounts for each agent. These are essentially bank accounts set aside exclusively to hold the cash that an agent uses to perform daily transactions, such as cash withdrawals, deposits, and bill payments. The key purpose of the new rule appears to be the need to separate agent operational funds from the principal’s other funds, ensuring transparency, traceability, and reducing the risk of misappropriation. Previously, agents often held their own cash or maintained informal “float” arrangements. This meant that agents could mix their own money with customer funds, increasing the risk of misappropriation, fraud, or operational errors. Principals also had limited visibility into how much cash agents actually had or how it was being used. By requiring that each agent’s operational cash be held in a segregated account, fintechs or principals must tie-up capital in multiple accounts that are earmarked solely for agent use as funds held in float accounts cannot ordinarily be deployed for other revenue-generating activities, such as lending, investment, or liquidity management across the broader business.

Key Takeaways

For venture-backed fintechs, the new CBN Agency Banking Regulations signal the need for a strategic, board-level reassessment of their business models, risk exposure, operational capacity, and long-term regulatory alignment. The new CBN Agency Regulations make it clear that agency banking is not a peripheral fintech play and is a highly supervised extension of the formal banking sector. 

In this environment, fintechs may need to consider deeper strategic moves, including mergers, acquisitions, or consolidation with licensed institutions, to achieve regulatory compliance, operational scale, and sustainable competitiveness in the new agency banking landscape.