Today on The Settlement Layer: The Nigerian regulatory apparatus is tightening its grip on conventional data while opening new avenues for digital assets. As industry players verify the infrastructure needed to meet the Central Bank's looming data localization mandate, the SEC is formally expanding its crypto sandbox to include major exchanges.
Following the Central Bank of Nigeria's mandate requiring all payment data to be stored domestically by January 1, 2027—a rule we've been tracking—an executive from Open Access Data Centre (OADC) has confirmed that the country possesses sufficient data center capacity to support the requirement. This addresses immediate industry concerns over infrastructure readiness.
Why it matters
With local capacity now confirmed, the operational challenge for bootstrapped gateways shifts definitively from feasibility to execution. Securing local infrastructure to comply with the CBN's ongoing regulatory tightening is now purely a matter of capital investment and migration planning.
Pan-African VC firm Launch Africa Ventures has sold its stake in South African payment processor Peach Payments to the 27four Nebula Fund. This secondary transaction provides an exit for an early investor and allows later-stage institutional capital to back an established fintech operating across nine African countries. Peach Payments is a direct competitor to African Payment Solutions.
Why it matters
This transaction is a strong signal of institutional confidence in African payment infrastructure as a core holding. The emergence of a healthy secondary market provides vital liquidity for early-stage investors, which in turn encourages more investment at the seed stage. For APS, this means a key competitor is now backed by institutional capital focused on long-term growth, likely leading to increased competitive pressure.
Financial institutions globally are accelerating core banking modernization, moving from legacy batch-processing systems to real-time, cloud-native, and API-first architectures. This strategic shift is driven by demands for faster product development, better data access, and lower operational costs, with cloud providers like AWS positioned as key enablers.
Why it matters
The modernization of your banking partners' core systems directly impacts your gateway's capabilities. This trend means more banks will offer real-time payment processing, richer data via APIs, and more resilient infrastructure. As a user of AWS, this trend also means your key infrastructure partner is becoming more deeply embedded and standardized within the financial services stack you rely on.
The South African Reserve Bank (SARB) is officially prioritizing the modernization of its existing digital payments infrastructure over the launch of a retail Central Bank Digital Currency (CBDC). A statement on Thursday clarified the strategic shift is aimed at making current digital payments faster, cheaper, and more inclusive rather than introducing a new form of currency.
Why it matters
This is a critical signal for the fintech ecosystem in South Africa. SARB's focus on improving existing rails like PayShap and instant EFT, rather than pursuing a CBDC, means that opportunities for innovation will be centered on building services on top of this enhanced, interoperable system. This reduces uncertainty and provides a clearer path for private sector product development on government-backed infrastructure.
Afreximbank and the AfCFTA Secretariat are increasing their advocacy for the Pan-African Payment and Settlement System (PAPSS), which is now reportedly functional in 28 countries with 190 commercial banks. George Elombi of Afreximbank stated the system could save Africa over $5 billion annually by reducing reliance on external currencies like the USD for intra-African trade, despite initial resistance from some central banks.
Why it matters
Wider adoption of PAPSS is a direct remedy for the forex repatriation and high transaction cost challenges faced by payment gateways. This renewed push signals that political and institutional weight is being applied to overcome initial inertia. Successful implementation would fundamentally improve the economics of intra-African ecommerce by enabling efficient local currency settlement, a core operational problem for your merchants.
China has approved South Africa's Standard Bank and its parent ICBC to clear Renminbi (Yuan) transactions across 19 African countries. The move allows the estimated $340 billion in annual China-Africa trade to be settled directly in Yuan, bypassing the US Dollar. The goal is to lower transaction costs, reduce currency risk, and speed up settlement.
Why it matters
This creates a significant new settlement rail for African merchants trading with China, offering a direct alternative to the dominant USD-based correspondent banking system. For a payment gateway, this is a major development in the forex landscape. It could necessitate supporting Yuan as a settlement currency to remain competitive for merchants engaged in Asia-Africa trade.
Fraudsters are increasingly leveraging AI to execute sophisticated scams, including deepfake voice instructions and synthetic identity fraud that relies on networks of 'mule accounts'. This has triggered an 'AI arms race', where traditional transaction monitoring is overwhelmed. The most effective defense is now seen as a continuously retrained, intelligence-led system that can identify emerging threats like mule networks early.
Why it matters
This escalating arms race renders static, rule-based fraud systems obsolete. For a payment gateway, it's no longer enough to have a fraud detection module; you need an adaptive system capable of identifying novel patterns in real time. The focus on mule account networks is particularly relevant for acquirers, as these are the primary exit ramps for fraudulent funds, making their detection a critical chokepoint.
Digging deeper into the 2026 Chargeback Field Report from Chargebacks911 we recently covered, the data reveals a severe gap between merchant perception and reality. While enterprise merchants estimate friendly fraud accounts for just 43.8% of their disputes, the firm's internal data indicates the true figure can reach as high as 86%—an upward revision from the 75% baseline previously cited. The report ties this directly to consumers increasingly using chargebacks as a default return method.
Why it matters
We've noted that merchants are already raising prices to cover these rising costs, but this massive perception gap explains why many are still struggling to fight back. Misattributing friendly fraud to criminal activity leads to ineffective defenses. Payment gateways have an opportunity to offer advanced analytics that actually differentiate between fraud types, as simply blocking transactions is no longer a viable strategy.
Nigeria's Securities and Exchange Commission (SEC) has granted Approval-in-Principle to seven new fintech and digital asset firms, including global crypto exchange Luno, to enter its Accelerated Regulatory Incubation Programme (ARIP). This expansion comes with a tightened capital requirement of NGN 2 billion. The move is seen as a strategic step to formalize oversight of the country's fast-growing digital asset market and balance innovation with investor protection.
Why it matters
This development marks a significant step towards creating a structured and transparent digital asset ecosystem in Nigeria. The dual action of expanding the sandbox while increasing capital requirements indicates a push to professionalize the sector. For a B2B payment gateway, this provides a clearer pathway for integrating regulated digital asset solutions, fostering a more stable environment for adopting crypto payment rails for merchants.
South Africa's Financial Sector Conduct Authority (FSCA) released its three-year regulation plan for 2026-2029 on Friday. The plan emphasizes modernizing the country's financial framework through harmonized, outcomes-based regulation, alignment with international standards, and a focus on managing emerging risks from fintech and cyber threats.
Why it matters
This roadmap from the FSCA signals a move towards more adaptive and principles-based regulation in South Africa. For payment providers, this could mean a less prescriptive but more accountability-focused compliance environment. The focus on international alignment and fintech risks suggests that rules around cross-border payments, data, and consumer protection will be a key area of focus for the regulator.
Experts from East African Community (EAC) partner states have approved a harmonized framework for trusted cross-border data flows and data protection. If endorsed by ministers, the framework will create a unified legal environment for the secure exchange of data among banks, mobile money operators, and e-commerce platforms across the region.
Why it matters
This is a significant step towards creating a single digital market in East Africa. Harmonized data protection rules reduce regulatory fragmentation and lower compliance costs for businesses operating across borders. For a pan-African payment gateway, this promises a more predictable and secure environment for processing transactions and managing data in the EAC bloc.
Safaricom's M-PESA is rolling out a new privacy feature that masks users' full phone numbers in 'Send Money' notifications. The system will now show only partial numbers and the recipient's first and last name, aiming to reduce fraud and improve user trust. A consent mechanism will allow for revealing full details when necessary.
Why it matters
This move by the continent's largest mobile money operator signifies a shift towards data minimization and privacy as a core product feature. For payment gateways integrating with M-PESA, this could have API-level implications, potentially changing what data is returned in transaction responses. It sets a new standard for user privacy in African digital payments.
Nigeria Demands Data Sovereignty The Central Bank of Nigeria's mandate for all payment data to be localized by January 2027 marks a significant step towards data sovereignty, forcing all financial players, including foreign gateways, to invest in local infrastructure.
Nigeria Moves to Regulate, Not Prohibit, Crypto By admitting Luno and other digital asset firms into its regulatory sandbox, the Nigerian SEC is formalizing oversight of the crypto sector, creating clearer pathways for integrating compliant crypto payment rails.
PAPSS Gains Momentum as Alternative to USD Multiple reports show a renewed, coordinated push from Afreximbank and African governments to drive adoption of the Pan-African Payment and Settlement System (PAPSS) to reduce reliance on the dollar for intra-African trade.
AI Enters an Arms Race with Fraud Fraudsters are now using AI to create synthetic identities and deepfakes, forcing a rapid evolution in defense mechanisms. The focus is shifting to continuously retrained models and proactive, intelligence-led systems rather than static rules.
Secondary Markets Signal Fintech Maturity The exit of an early venture investor from Peach Payments via a sale to an institutional fund shows the growing maturity of Africa's fintech ecosystem, where secondary transactions provide liquidity and attract later-stage capital for proven infrastructure players.
What to Expect
2026-07-31—Deadline for applications for the Bank of Tanzania's third Fintech Regulatory Sandbox cohort.
2027-01-01—Deadline for financial institutions and fintechs in Nigeria to comply with the CBN's data localization directive.
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