Overseas Card Transactions Will Enhance Reserve Accretion – Analysts

Financial analysts say the Central Financial institution of Nigeria’s (CBN) resolution to develop and safe international card transactions will play a vital position in boosting international change reserve accretion, deepening FX market liquidity, and strengthening the naira over the medium to long run. The transfer, they argue, displays rising confidence in Nigeria’s exterior sector and alerts a gradual return to normalcy after years of international change shortage and transaction restrictions.

Day by day Belief stories that the CBN just lately directed banks and non-bank acquirers to implement multi-factor authentication for international card transactions. The transfer is to strengthen safety and enhance consumer expertise for worldwide cardholders within the nation. The measures are additional geared at guaranteeing uninterrupted and environment friendly native forex withdrawals, funds, and switch providers for customers of foreign-issued cost playing cards throughout Nigeria, significantly vacationers and Nigerians within the diaspora visiting the nation.

Analysts consider the coverage goes past cost comfort and speaks on to Nigeria’s broader macroeconomic technique—one targeted on attracting international capital, encouraging inflows by means of formal channels, and strengthening confidence within the nation’s monetary system.

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Overseas capital inflows reached US$20.98 billion within the first 10 months of 2025, a 70 per cent improve over complete inflows for 2024 and a 428 per cent surge in comparison with the US$3.9 billion recorded in 2023, reflecting a transparent resurgence in investor confidence.

It began with native banks lifting restrictions on card transactions overseas by resuming home card use overseas.

As an example, three Tier-1 banks and a mid-tier financial institution, United Financial institution for Africa (UBA) Plc, FirstBank, GTBank and Wema Financial institution Plc respectively, all introduced the resumption of worldwide transactions on their naira debit playing cards. For the banks, the resumption aligns with its continued dedication to offering purchasers with seamless and enhanced banking experiences.

Whereas clients are celebrating this milestone, the CBN has additionally directed banks and non-bank acquirers to implement multi-factor authentication that enables international playing cards use domestically.

The regulator mentioned the brand new framework is designed to enhance entry to funds, improve transaction safety, and increase general consumer expertise for international cardholders.

CBN’s Director of Monetary Coverage and Regulation, Rita Sike additional instructed monetary establishments to use the identical authentication necessities for $200 transactions, to transactions above $500 per week and $1,000 per 30 days, and to make sure that point-of-sale (POS) terminals are correctly configured for the usage of foreign-issued playing cards.

As well as, banks and non-bank acquirers had been directed to configure all automated teller machines (ATMs), POS, and digital terminals to just accept worldwide playing cards by means of Nigerian acquirers, comply absolutely with card affiliation requirements, and procure the mandatory certifications to allow seamless transaction processing. Establishments had been additionally instructed to keep up excessive system availability to ensure uninterrupted transaction processing.

The round reads: “On this regard, banks and non-bank acquirers shall: implement multi-factor authentication for all withdrawals and on-line transactions exceeding $200 per day, $500 per week, and $1,000 per 30 days (or its equal),” the round reads.

“With respect to ATM money withdrawal transactions, guarantee compliance with authorised money withdrawal limits.

“Clearly talk the relevant change charge, which shall be market- pushed and primarily based on the prevailing official charge, in addition to different related prices to customers. Transactions ought to solely be accomplished after the consumer has accepted the phrases (with proof obtained).

“Preserve ample liquidity place to settle transactions. Settle transactions for the service provider in native forex (naira). Implement transaction monitoring to detect uncommon patterns in the usage of international playing cards throughout all terminals. Strengthen know-your-customer and anti-money laundering controls for retailers dealing with international card funds.

Require their retailers to make sure that all their copies of card-present transaction receipts are correctly signed and to request legitimate id paperwork the place a transaction seems suspicious.”

President, Affiliation of Bureaux De Change Operators of Nigeria (ABCON) , Dr. Aminu Gwadabe, mentioned the reforms instituted by the CBN within the FX market proceed to yield the specified outcomes, one in every of which is the reactivation of worldwide transactions on their naira-denominated debit playing cards, which is bringing nice advantages to vacationers and companies.

Clearly, earlier than the Cardoso-led administration group of the Central Financial institution of Nigeria (CBN)  assumed workplace in October 2023, one of many largest challenges that the nation’s financial system was grappling with was foreign exchange shortage.

To take care of the problem, companies and vacationers needed to resort to the parallel FX market to supply for funds, a scenario which allowed FX hypothesis to thrive. Thus, one of many first key main steps that the CBN, led by its Governor, Cardoso, took in 2023, was to embark on a collection of daring reforms to draw extra international capital to the financial system, obtain worth and change charge stability.

Particularly, the apex financial institution liberalized the international change market, stopped central financial institution financing of the fiscal deficit, leading to elevated investor confidence within the Nigerian financial system and permitting the nation to efficiently return to worldwide capital markets final December and being upgraded by ranking businesses.

Additionally, the implementation of the reforms has considerably boosted the nation’s FX reserves in addition to liquidity within the Fx market. Banks resume use of naira debit playing cards for worldwide transactions Certainly, reflecting the rising greenback liquidity, Nigerian banks just lately began lifting the over three-year moratorium on the usage of naira-funded debit playing cards overseas.

Commenting on the event in a report, Head of economic establishments rankings at Agusto & Co, Ayokunle Olubunmi, mentioned the improved liquidity within the FX market supported banks’ resolution to reactivate their naira playing cards for international transactions. “The moderating premium on the parallel market transactions and the lowered arbitrage alternatives can also be chargeable for the choice,” he mentioned.

The resumption of international card transactions—each for Nigerians utilizing naira playing cards overseas and for international cardholders transacting domestically—marks a major shift. In line with market observers, it alerts that FX liquidity situations have improved sufficiently for the apex financial institution to loosen controls with out jeopardising forex stability.

Surge in foreign exchange influx additional highlighting the rising greenback liquidity, an evaluation of FX inflows in the previous few months confirmed that Nigeria attracted $5.96 billion month-to-month inflows from Could 2025 until date. Trade stories point out that Nigeria’s international change market witnessed a major increase in Could, with complete inflows rising by 62.0 per cent month-on-month (M-o-M) to $5.96 billion, pushed largely by elevated participation from home and international buyers.

This marked one of many highest influx ranges in current months and alerts bettering market sentiment amid macroeconomic reforms and a comparatively steady naira.

Diaspora remittances to Nigeria, estimated at $23 billion yearly, stay a dependable supply of foreign exchange to the home financial system

In an emailed be aware to buyers, analysts at Monetary Derivatives Firm Restricted (FDC) attributed rising FX inflows to a surge in oil costs and a number of influx channels created by the CBN. Significantly, the apex financial institution, has in current months, activated a number of FX sources to extend greenback inflows, increase greenback entry to producers and retail finish customers and assist naira restoration throughout markets.

FX reserve accretion

The rising foreign exchange liquidity has equally impacted positively on the nation’s greenback buffers as Cardoso, just lately, introduced a quantum leap within the Internet FX Reserve (NFER) place at $23.11 billion on the finish of final yr. In line with the apex financial institution knowledge, NFER stood at $23.11 billion, the very best stage in over three years, a marked improve from $3.99 billion at year-end 2023, $8.19 billion in 2022, and $14.59 billion in 2021.

The NFER, which adjusts gross reserves to account for near-term liabilities resembling FX swaps and ahead contracts, is extensively considered a extra correct indicator of the international change buffers accessible to fulfill rapid exterior obligations. In line with Cardoso, the rise in reserves displays a mixture of strategic measures undertaken by the CBN, together with a deliberate and substantial discount in short-term international change liabilities – notably swaps and ahead obligations.

Findings present that the reserves have continued to strengthen in 2025. Whereas the primary quarter figures mirrored some seasonal and transitional changes, together with important curiosity funds on foreign-denominated debt, underlying fundamentals stay intact.

Analysts consider such reforms—targeted on effectivity, safety, and transparency—will play an more and more necessary position in constructing a resilient exterior sector and sustaining long-term progress.