Fidelity Bank blocks transfers to OPay, Moniepoint, others

• Fidelity Bank imposes transfer restrictions on neobanks like OPay, Moniepoint, and Palmpay due to concerns about inadequate customer verification practices
• Sources suggest that the restrictions are in response to rising losses from cyberattacks and fraud, raising questions about regulatory consent

Fidelity Bank, a prominent Nigerian commercial bank, has imposed limitations on financial transfers to neobanks like OPay, Moniepoint, and Palmpay. This decision comes in response to concerns about the neobanks’ inadequate Know Your Customer (KYC) practices, which have led to an increase in fraudulent activities.

As a result, Fidelity Bank has restricted customer fund transfers to these neobanks. Customers have reported that these neobanks are no longer listed among approved financial institutions on Fidelity Bank’s mobile app. While Fidelity Bank claimed the restrictions were due to an app upgrade, sources within the affected fintech companies and individuals familiar with the situation provided a different explanation.

According to insiders, the restrictions were implemented to address rising concerns related to fraud and customer verification. Although OPay denied being impacted by the restrictions, Palmpay’s Chief Marketing Officer stated that Fidelity Bank had notified them of an ongoing systems upgrade and that they would be reinstated once it was completed. Moniepoint also confirmed the existence of the transfer restriction.

Fidelity Bank declined to comment on the issue, but sources suggest that the restrictions are a response to mounting losses from cyberattacks and fraudulent activities. These losses are attributed to inadequate due diligence and KYC practices, and traditional banks have expressed doubts about the reliability and effectiveness of the verification methods used by neobanks.

The Central Bank of Nigeria (CBN) Customer Due Diligence Regulations 2023 do not explicitly address the bank’s ability to impose restrictions on transfers to other banks unilaterally. It is unclear whether Fidelity Bank informed the CBN before implementing these restrictions. While there are concerns about regulatory consent, the bank’s actions have been described as a precautionary measure to address fraud concerns.

This situation underscores the evolving landscape of digital banking in Nigeria and the challenges related to customer verification and fraud prevention.