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Fidelity Bank Stops Transfers To Opay, Moniepoint, And Palmpay Over KYC

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Fidelity Bank, a Nigerian commercial bank, has blocked fintechs like OPay, Palmpay, Kuda, and Moniepoint over concerns that their lax KYC processes are leading to increased fraud cases.

Nigerian commercial bank Fidelity Bank is restricting consumer fund transfers to neobanks, including Moniepoint, Kuda, OPay, and PalmPay, said multiple sources with direct knowledge of the matter, techcabal is reporting.

A week ago, a small number of customers first noticed that these neobanks were no longer listed on the list of approved financial institutions on the Fidelity Bank app. At least five sources have now confirmed the development.

The affected digital financial services remain unavailable for selection on Fidelity Bank’s mobile app at press time. While the bank informed customers that the restrictions were related to an app upgrade, two people with direct knowledge of the matter and other sources at the affected fintechs told a different story.

Five people close to the situation told TechCabal that the transfer restrictions began at least two weeks ago over rising fraud and customer verification concerns.

OPay denied being affected by the restrictions, despite complaints from customers saying otherwise. Sofia Zab, Palmpay’s Chief Marketing Officer, said: “They gave us a notice last week that they are upgrading their systems and will put us back after that is done.” A source at Moniepoint also confirmed the restriction.

Fidelity Bank declined to comment.

Sources connected to the bank told TechCabal that the restrictions are related to mounting fraud losses.

At least three banking industry experts said that Nigerian banks and fintech companies have suffered massive losses to cyber attacks and fraudsters since the start of the year. “The issues are due diligence and KYC,” said a bank source who asked not to be named. “Until they get their house in order, they will continue to experience issues [like being blocked] by banks.

Away from these anti-fraud systems, there are valid questions about whether a bank can unilaterally restrict transfers to another bank, and the CBN Customer Due Diligence Regulations 2023 is silent on the matter. Existing regulations state that banks should have a risk management framework in place to identify and mitigate the risks.

It is unclear whether Fidelity Bank communicated to the CBN before it began restricting accounts. Sources close to the situation say the bank likely acted without the regulator’s consent.

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