The Central Bank of Nigeria updated its framework for digital escrow services in 2024. Here's what it means for your business.
Escrow services sit at a sensitive intersection of payments, trust, and contract enforcement. When they work well, they protect both buyers and sellers. When they're poorly governed, they become vehicles for fraud, fund misappropriation, and consumer harm.
The CBN's new regulations are a direct response to the proliferation of informal and semi-formal escrow arrangements on digital platforms many of which have been operating without the oversight that the scale and sensitivity of their activity demands.
What Has Changed
The updated framework introduces several key requirements for digital platforms offering escrow services. Platforms must now hold a specific licence or operate under a licensed principal before accepting escrow funds from the public. Client funds must be held in segregated accounts, entirely separate from the platform's operational finances. Platforms are required to maintain detailed transaction records and make them available to the CBN on request. There are also new obligations around dispute resolution, platforms must have a documented, auditable process for handling disagreements between transacting parties.
Penalties for non-compliance are significant, ranging from fines to licence revocation.
What It Means for Digital Platforms
For platforms that have been operating informally, the path forward requires either obtaining the appropriate licence, partnering with a CBN-licensed escrow provider, or discontinuing the offering entirely. Half-measures such as describing escrow-like services under different terminology are unlikely to survive regulatory scrutiny.
For platforms already operating within a compliant structure, the regulations largely formalise what good practice already looked like. The main new burden is documentation: ensuring that internal processes are recorded, auditable, and defensible.
How KetaPay Is Already Aligned
KetaPay was built from the ground up to operate within Nigeria's regulatory environment. Client funds are held in segregated escrow accounts, all transactions maintain a full audit trail, and KetaPay's dispute resolution process is documented and structured to meet the evidentiary standards regulators expect.
For businesses that partner with KetaPay, compliance with the CBN's escrow framework is built into the product but not something that needs to be retrofitted.
Conclusion
The CBN's new escrow regulations raise the floor for how digital platforms handle trust and funds in Nigeria. That is a good thing. The businesses and platforms that treat compliance as infrastructure — not overhead and will be better positioned for the long term. For those still operating informally, the window to get structured is narrowing.
