“This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant,” one person familiar with the CBN’s plans said. 

Before now, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly, but recertification will mean acquirers (banks and mobile money operators) have to register each TID separately. Registration requires the provision of an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank. 

The validation of a POS terminal delivered to a particular location would be handled by licenced Payment Terminal Service Providers (PTSPs) like Interswitch, ETOP, or CitiServe. 

“Banks will typically select and map each terminal registration with a particular PTSP that sets it up, deploys, and continues to support the merchant. PTSPs are also the bridge to terminal procurement from the OEM as banks/acquirers were not allowed to engage directly with OEM for procurement,” a product manager at a fintech startup said. 

While there is no timeline given by the CBN for the commencement of the recertification exercise, TechCabal learned that the Nigerian Interbank Settlement System (NIBSS) was mandated by the CBN to come up with a geofencing plan that ensures that terminals are not used outside the locations where they are registered. The terminals, once certified, can only be used in the location where it is deployed. If the POS terminal is used outside the address or location, NIBSS will disable it.

While the timeline of recertification is unclear, mobile money agents will be asked to provide additional information as part of their KYC to enable them to operate Tier-3 accounts. A Tier-3 account allows transactions of up to ₦1 million, and customers can hold up to ₦1 billion in deposits. 

Before now, agents were allowed to operate any level of tiered accounts provided that proper KYC was done and necessary documentation was achieved. Tier-1 accounts are the most popular among agents because they require minimal documentation to open and operate. The recertification is likely to push agents towards operating more Tier-3 accounts. 

The plan also mandates the audit of agents and review of their processes by acquirer banks, Super Agents, and MMOs to align with the proposed recertification program and beyond. 

Mobile money operators who spoke to TechCabal on condition of anonymity said they are still trying to get clarification on some of the features of the certification exercise for POS terminals.

“Since this investigation began, Leatherback has supported the EFCC with multiple resources and documentary evidence that has aided this investigation,” said Ibrahim Ibitade on a phone call with TechCabal. “We have done as much as required to ensure the authorities have all the necessary information. My team has spent 35 of the last 60 days at the EFCC offices in Lagos and Abuja. We are not hiding from the EFCC.” 

Leatherback, SDQ Financials and a complex EFCC case 

Three sources with direct knowledge of the matter told TechCabal that the EFCC is investigating fraud involving a company called SDQ Financials, an incident first reported by TechCabal in September. According to the Corporate Affairs Commission website, SDQ Financials is incorporated in Nigeria, and only one individual, Lawal Mohammed Kazeem, is listed as having significant control of the company. SDQ did not respond to TechCabal’s request for comments.

However, six people with knowledge of the matter said SDQ Financials, a merchant on Leatherback, promised several companies and individuals better FX rates than what was obtainable on Nigeria’s black market. Those sources said several prominent companies, including a publicly listed company, gave billions of Naira to SDQ Financials, an unregulated entity with very little publicly available information, for FX deals. Sources described deals similar to those done by Float, a company that lost at least ₦5 billion in customer deposits. 

Leatherback said the statement and facts of the issue it shared with this publication in September remain unchanged. According to Leatherback, SDQ Financials is a merchant that uses Leatherback’s Naira and USD wallets. The company said it completed a Know Your Customer (KYC) onboarding process for SDQ Financials and kept records of its transactions, as mandated by law. It denies any direct involvement with SDQ Financials and says it did not know about the fraud allegedly perpetrated by SDQ Financials. 

A financial services expert told this publication that the EFCC began investigating Leatherack because some of the Naira funds reportedly received by SDQ Financials were traced to Leatherback’s wallets. It is unclear how much the EFCC is trying to actively recover, but two sources say at least ₦3 billion remains unaccounted for. The EFCC has not shared any information on the specifics of its investigation. 

Nonetheless, Leatherback says it is unfazed and believes it is being bullied. “If a commercial bank in Nigeria issues an account to an individual or a business and that business goes to defraud other people, will you declare the CEO of the commercial bank wanted?” Ibitade asked. 

Zedcrest Capital, Leatherback’s lead investor in its 2022 $10 million raise, declined to comment on any part of this story.