Highlights of CBN’s Circular on Requirements for Payment System Licenses
On the 24th of May 2021, the Central Bank of Nigeria (CBN) issued a circular stipulating the requirements for licensing of Payment Services Providers (PSP). The circular comprehensively highlights the basic licensing requirements for Payment Services Providers. The circular is a consolidation of an earlier one issued by CBN on the 9th of December, 2020 which provides for New License Categorization for the Nigerian Payment System.
Below is a highlight of the new CBN’s Circular made in tabular form for convenience.
1. SWITCHING AND PROCESSING LICENSE
Switching companies facilitate the exchange of value between financial service providers, merchants, their customers and other stakeholders. These are financial institutions operating in the country and are otherwise called issuers of payment tokens (cards, vouchers, etc), which are used on the network of switches. Below is the licence requirement for Switching and Processing companies.
| CAPITAL REQUIREMENTS | CONTACT | LICENSING FEE | LICENSE VALIDITY |
| A sum of #2,000,000,000.00 (two trillion naira) would be required | All applications must be directed to the Director of Payments System Management Department of Central Bank of Nigeria (CBN) with evidence. |
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2. MOBILE MONEY OPERATOR LICENSE
Mobile money is a technology that allows individuals to receive, store and spend money using a smartphone. It is sometimes referred to as a ‘mobile wallet’. Below is the licensing requirement for mobile money operators.
| CAPITAL REQUIREMENTS | CONTACT | LICENSING FEE | LICENSE VALIDITY |
| A sum of #2,000,000,000.00 (two trillion naira) would be required. (Shareholders funds unimpaired by losses). | All applications must be directed to the Director of Payments System Management Department of Central Bank of Nigeria (CBN) Abuja with evidence. | 1. A non refundable fee of #100,000.00 (one hundred thousand naira) must be paid to the central bank of Nigeria (CBN) via licensing fee payment account.
2. A sum of #1,000,000.00 is required to be paid before the final license must have been issued. |
1. Approval-in-principle for six months.
2. Commercial license would be determined by the bank upon satisfaction. |
3. PAYMENT SOLUTION SERVICES (PSS)
Payment solution services provide bridging infrastructure, end-to-end electronic payment solutions, systems and services to stakeholders within the financial services space. Some of the operators that provide payment solution services are usually integrated into the card schemes and core banking systems. Below is the license requirement for Payment Solution Services.
| CAPITAL REQUIREMENTS | CONTACT | LICENSING FEE | LICENSE VALIDITY |
| A sum of #250,000,000.00 (two hundred and fifty million naira) would be required. (Shareholders funds unimpaired by losses). | All applications must be directed to the Director of payments system management department of central bank of Nigeria (CBN) Abuja with evidence. | 1. A non refundable fee of #100,000.00 (one hundred thousand naira) must be payable to the central bank of Nigeria (CBN) via the licensing fee payment account.
2. A sum of #1,000,000.00 is required to be paid before the final license must have been issued |
1. Approval-in-principle for six months.
2. Commercial license would be determined by the bank upon satisfaction. |
4. PAYMENT TERMINAL PROVIDER (PTSP) LICENSE
A payment terminal, also known as a Point of Sale (POS) terminal, is a device which interfaces with payment cards to make electronic funds transfers. The terminal allows the merchant or their client to swipe, insert or hold a card near the device to capture the information. They are often connected to point of sale systems so that payment amounts and confirmation of payment can be transferred automatically to the merchants retail management system. Below is the license requirement for Payment Terminal Providers.
| CAPITAL REQUIREMENTS | CONTACT | LICENSING FEE | LICENSE VALIDITY |
| A sum of #100,000,000.00 (one hundred million naira) would be required. (Shareholders funds unimpaired by losses). | All applications must be directed to the Director of payments system management department of central bank of Nigeria (CBN) Abuja with evidence. | 1. A non refundable fee of #100,000.00 (one hundred thousand naira) must be payable to the central bank of Nigeria (CBN) via the licensing fee payment account.
2. A sum of #1,000,000.00 is required to be paid before the final license must have been issued. |
1. Approval-in-principle for six months.
2. Commercial license would be determined by the bank upon satisfaction. |
5. PAYMENT SOLUTION SERVICE PROVIDER (PSSP)
Payment Solution Services bridge infrastructure, end-to-end electronic payment solutions, systems and services to stakeholders within the financial services space. Below is the license requirement. Below is the license requirement:
| CAPITAL REQUIREMENTS | CONTACT | LICENSING FEE | LICENCE VALIDITY |
| A sum of #100,000,000.00(one hundred thousand naira) would be required.( shareholders funds unimpaired by losses). | All applications must be directed to the Director of payments system management department of Central Bank of Nigeria (CBN) Abuja with evidence. | 1. A non refundable fee of #100,000.00 (one hundred thousand naira) must be payable to the central bank of Nigeria (CBN) via the licensing fee payment account.
2. A sum of #1,000,000.00 is required to be paid before the final license must have been issued. |
1. Approval-in-principle for six months.
2. Commercial license would be determined by the bank upon satisfaction. |
6. SUPER AGENT LICENSE
Super Agents are licensed by the CBN to recruit agents for the purpose of agency banking i.e. provision of financial services within communities on behalf of banks. Below is the license requirement:
| CAPITAL REQUIREMENTS | CONTACT | LICENCING FEE | LICENSE VALIDITY |
| A sum of #50,000,000.00 (fifty million naira) would be required (shareholders funds unimpaired by losses). | All applications must be directed to the Director of payments system management department of Central Bank of Nigeria (CBN) Abuja with evidence. | 1. A non refundable fee of #100,000.00 (one hundred thousand naira) must be payable to the central bank of Nigeria (CBN) via the licensing fee payment account.
2. A sum of #1,000,000.00 is required to be paid before the final license must have been issued. |
1. Approval-in-principle for six months.
2. Commercial license would be determined by the bank upon satisfaction. |
The requirements, implemented, are capable of enhancing the corporate governance of fintech industry players. Nevertheless, the requirements for payment of escrow amount may pose a financial challenge to startups.
Download the Approved New Licence Categorisation Requirements Consolidated – 2021 HERE.
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