The Nigeria Deposit Insurance Corporation (NDIC) has released deposit insurance guidelines on the Mobile Payments System (MPS), which is known as “Pass-Through Deposit Insurance scheme.”

This was sequel to the introduction of mobile banking in Nigeria by the Central Bank of Nigeria (CBN), which issued operating licences to many banks and telecommunication companies to provide the services.

The initiative 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).

It is an entrepreneur licensed by the CBN to carry out the business of mobile payment within the country.
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.
NDIC said the public policy objectives of the pass-through deposit insurance guidelines, which form the framework for the scheme, guarantee the payment of insured sums to subscribers of MMOs in the event of failure of insured institutions where pool funds are maintained.

It is also to promote both financial inclusion, by protecting and ensuring the safety, as well as enhance confidence of subscribers and ensure continuity of the MPS.

Other participants in the NDIC scheme are the Payment Agent- the agent appointed by the mobile payment opertors to receive or pay monies at various locations on its behalf; and

Customers, Mobile Network Operator– the subscribers to MPOs for mobile payments services and the telecommunication network/infrastructure providers, which enables switching, processing and settlement for mobile payments services, respectively.

In this scheme, subscribers of MMOs shall be insured up to the maximum coverage level of N500,000 per subscriber per bank or the applicable coverage level for depositors in line with the NDIC Act.
All KYC requirements on the owners of funds in Trust (Pool) accounts shall be fully met as specified by the CBN, while the insured institutions, MMOs and agents shall render returns in specified formats to NDIC on predetermined frequencies.

Also, MMOs shall be required to take Fidelity Bond Insurance for any losses arising from the fraudulent acts of their staff and agents. The applicable rate of the fidelity insurance shall be specified by NDIC from time to time.
NDIC shall issue regulations to operators on the implementation of the Pass-Through Deposit Insurance.