CBN FX reforms drive return of foreign cards
Foreign card usage is returning to Nigeria after years of restrictions, reflecting improved FX liquidity and renewed investor confidence. Recent CBN directives signal a shift from blanket controls to targeted safeguards, highlighting how exchange-rate reforms are reshaping Nigeria’s payments ecosystem, SAMI TUNJI reports
for some years, foreign card usage in Nigeria sat at the crossroads of policy caution and market stress. International transactions on naira debit cards were suspended as the country battled acute foreign-exchange shortages, weak external buffers, and rising arbitrage between official and parallel markets. Businesses and travellers were pushed towards cash, informal channels and offshore cards, while foreign cardholders visiting Nigeria faced limited access to local payment infrastructure.
That backdrop explains why the Central Bank of Nigeria’s latest directive on foreign card transactions is being read not as an isolated compliance update, but as part of a longer arc of reforms that began after the current management of the Central Bank of Nigeria assumed office in September 2023. Since 2023, the CBN has liberalised the FX market, unified exchange rates, and halted monetary financing of fiscal deficits. Clearing of the $7bn FX backlog marked a turning point for investors. Nigeria returned to international capital markets in December 2023, issuing new debt instruments. Ratings agencies responded by upgrading the country’s outlook, while multilateral lenders described the reforms as necessary for sustainability.
The World Bank recently described the measures as “bold interventions” that address structural weaknesses. Nigeria’s sovereign risk spread fell to its lowest point since January 2020, reflecting improved investor sentiment. Portfolio managers have noted the shift. “Nigeria appears to be back in business as long-awaited economic reforms take shape,” said East Capital’s Emre Akcakmak. He highlighted improved liquidity and flexibility in profit repatriation as key factors in renewed interest.
At the heart of the latest directive on foreign card transactions is a requirement for banks and non-bank acquirers to implement multi-factor authentication for such transactions, a step the regulator says is aimed at strengthening security while improving the user experience for international cardholders. The measures are designed to ensure uninterrupted and efficient local currency withdrawals, payments and transfers for users of foreign-issued payment cards across Nigeria, particularly tourists and Nigerians in the diaspora visiting the country. This is a notable shift from an earlier period when the priority was conserving scarce dollars.
The new rules did not emerge in a vacuum. Foreign capital inflows reached $20.98bn in the first 10 months of 2025, representing a 70 per cent increase over total inflows recorded in 2024 and a 428 per cent jump from the $3.9bn recorded in 2023. That improvement in inflows has allowed the CBN to cautiously loosen constraints around card usage, both domestically and abroad, without reopening the door to the kind of speculative pressure that defined earlier years.
It was against this backdrop that Nigerian banks began lifting restrictions on card transactions abroad. Three Tier-1 lenders and a mid-tier bank, United Bank for Africa, FirstBank, GTBank and Wema Bank, announced the resumption of international transactions on their naira debit cards. For customers, the announcements marked the end of an extended moratorium. For regulators, they signalled confidence that FX liquidity had improved enough to support controlled outbound spending.
While customers welcomed the return of international card functionality, the CBN moved to tighten the operating framework around foreign card usage within Nigeria. According to the apex bank, the new framework is designed to improve access to funds, enhance transaction security and boost the overall user experience for foreign cardholders, without compromising financial integrity.
Inside the CBN’s new card rules
The operational details of the policy were outlined in a circular signed by the CBN’s Director of Financial Policy and Regulation, Dr Rita Sike. Financial institutions were instructed to apply multi-factor authentication to all withdrawals and online transactions exceeding $200 per day, $500 per week and $1,000 per month, or their naira equivalents. The same requirements apply across automated teller machines, point-of-sale terminals and virtual payment channels.
The circular states: “In this regard, banks and non-bank acquirers shall implement multi-factor authentication for all withdrawals and online transactions exceeding $200 per day, $500 per week, and $1,000 per month (or their equivalent).” It further directs institutions to ensure compliance with approved cash withdrawal limits for ATM transactions.
Beyond authentication thresholds, the CBN emphasised transparency and settlement discipline. Banks and acquirers were instructed to “clearly communicate the applicable exchange rate, which shall be market-driven and based on the prevailing official rate, as well as other associated charges to users. Transactions should only be completed after the user has accepted the terms (with evidence obtained).”
The regulator also required institutions to maintain sufficient liquidity to settle transactions and to ensure that merchants are settled in local currency. Transaction monitoring systems must be calibrated to detect unusual patterns in the use of foreign cards across all terminals, while know-your-customer and anti-money laundering controls for merchants handling foreign card payments are to be strengthened.
Merchants, in turn, are required to ensure that card-present transaction receipts are properly signed and that valid identity documents are requested where a transaction appears suspicious. Banks and non-bank acquirers were also directed to report suspicious transactions to the Nigeria Financial Intelligence Unit and to recalibrate fraud-monitoring systems to reduce false declines on legitimate transactions.
Taken together, the measures reflect a balancing act. The CBN is reopening channels for foreign cards and international spending, but within a framework that prioritises traceability, system resilience and regulatory oversight. For foreign cardholders, the changes promise broader acceptance and fewer failed transactions. For regulators, they are a safeguard against abuse at a time when confidence in the FX market is still being rebuilt.
Liquidity, confidence and the return of cards
The broader economic context explains why the CBN now appears more comfortable easing restrictions around card usage. According to the CBN Governor, Olayemi Cardoso, Nigeria’s external sector strengthened decisively in 2025, with the current account balance rising by over 85 per cent to $5.28bn in the second quarter from $2.85bn in the first quarter. Foreign reserves stood at $46.7bn by mid-November, providing more than 10 months of forward import cover. Analysts at United Capital Research have expressed optimism that Nigeria’s external reserves will continue their steady ascent in the final quarter of 2025, buoyed by stronger oil export receipts, robust diaspora remittances, and a favourable trade balance.
“With the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help to maintain relative stability in the naira across both official and parallel markets,” analysts at Cowry Assets said in a recent weekly market report.
For market operators, these metrics matter because they speak directly to the sustainability of policy choices. The President of the Association of Bureaux De Change Operators of Nigeria, Dr Aminu Gwadabe, said reforms in the FX market are yielding results, including the reactivation of international transactions on naira-denominated debit cards, which he said is benefiting travellers and businesses.
Also, the CBN’s Quarterly Statistical Bulletin for the first quarter of 2025 revealed that total foreign-exchange utilisation across the economy increased by 19 per cent quarter-on-quarter to $9.3bn in Q1 2025, representing a 39 per cent year-on-year growth. The rise was driven mainly by a surge in invisible transactions, such as services and transfers, which grew by 54 per cent quarter-on-quarter to $4.5bn. This category’s share of total FX usage expanded to about 48 per cent, up from 37 per cent in the fourth quarter of 2024.
These numbers indicate that the country is gradually rebuilding foreign-exchange buffers. Analysts at FBNQuest added that ample liquidity and attractive yields in the domestic market have supported robust investor participation in government securities auctions, further strengthening market stability and investor confidence in the naira.
Analysts broadly agree that the return of card functionality is tied to improved liquidity and reduced arbitrage. The Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said improved liquidity in the FX market supported banks’ decision to reactivate naira cards for global transactions. “The moderating premium on parallel market transactions and the reduced arbitrage opportunities are also responsible for the decision,” he said.
Data from recent months support that assessment. Nigeria attracted average monthly FX inflows of about $5.96bn from May 2025, with inflows in that month rising by 62 per cent month-on-month, driven largely by increased participation from domestic and foreign investors. Diaspora remittances, estimated at about $23bn annually, continue to provide a stable source of foreign exchange.
In a note to investors, analysts at Financial Derivatives Company Limited attributed rising inflows to a combination of higher oil prices and multiple FX channels activated by the CBN. These include new products to support diaspora remittances, licensing of additional international money transfer operators, adoption of a willing buyer, willing seller FX model and improved naira liquidity access for authorised dealers.
The impact is also visible in reserve quality. Net foreign-exchange reserves stood at $23.11bn at the end of last year, up from $3.99bn at the end of 2023. Cardoso said the improvement reflected deliberate policy choices, including a reduction in short-term FX liabilities and efforts to rebuild confidence. “This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability,” he said.
For consumers and businesses, the return of foreign card access and international naira card usage does not eliminate FX risk or policy uncertainty. But it signals a shift from blanket restrictions to more targeted controls, anchored on liquidity, monitoring and transparency. In that sense, the re-entry of foreign cards into Nigeria’s payment ecosystem is less about convenience alone and more about what it says about the direction of FX policy.
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