Nigeria Payments Service Provider License

Fionza Consultants boasts a team of seasoned licensing professionals with extensive expertise in helping global clients obtain a Nigeria Payments Service Provider License. With our guidance, you can rest assured that you’ll meet all the necessary prerequisites for your license application, including the essential step of meeting the minimum capital deposit requirement. Trust Fionza Consultants to be your dedicated partner throughout the entire engagement process.

Nigeria

Company Registration – 4 Week
Local Director? – No
Bank Account Opening – 4 Weeks
Travel Required – No

Nigeria Payments Service Provider License

Fionza Consultants specializes in assisting international clients in obtaining a Nigeria Payments Service Provider License. The Central Bank of Nigeria (CBN) has reported a substantial 35% increase in digital payment users within Nigeria, driven by significant investments in payment technology infrastructure by banks, telecoms, and fintech companies. Consequently, many foreign businesses are considering entering the thriving Nigerian payments landscape.

Both local and foreign investors looking to offer specific payment services in Nigeria must secure one of the CBN’s designated licenses. This article aims to provide insights into key payment licenses in Nigeria and their permissible and non-permissible activities.

Fionza Consultants, staffed with a team of licensing experts, is your trusted partner in navigating this complex terrain. We will guide you in understanding the various payment licenses available in Nigeria and help determine which one aligns with your specific business model. Furthermore, we offer a comprehensive range of services to international clients, from establishing a business entity to securing the necessary payment service provider license for seamless operations in Nigeria.

What are the laws governing the issuance of a Nigeria Payments Service Provider License?

The Nigerian fintech sector has witnessed substantial growth in recent years. However, one persistent challenge that has puzzled investors and key players in Nigeria is the absence of a well-defined structure and licensing framework for payment services. The presence of multiple regulations and guidelines within the sector has made it challenging for industry stakeholders to determine the appropriate Nigeria Payments Service Provider Licenses that align with their intended operations.
On December 9, 2020, the Central Bank of Nigeria (CBN) issued a Circular introducing a new classification system for Nigeria’s payments system. It’s worth noting that in 2018, the CBN had published an exposure draft on payment service provider licensing but had not released a comprehensive circular. This regulatory delay in recent years has caused anxiety and uncertainty among current market participants and potential investors in Nigeria’s payments industry. However, the release of this Circular has brought much-needed clarity regarding licensing categories and their associated minimum capital requirements for all involved parties. Additionally, it’s noteworthy that the previously high minimum capital thresholds outlined in the conceptual framework have been significantly reduced for several categories, which is a positive development.

What are the categories of Nigeria Payments Service Provider Licenses?

Under the Central Bank of Nigeria’s recent Circular on “new license categorization,” various categories of licenses have been established for businesses aiming to offer payment services in Nigeria, tailored to the range of services they intend to provide. These include:

Payment Solutions Service Provider (“PSSP”) License
Payment Terminal Service Provider (“PTSP”) License
Payment Solution Service (“PSS”) License
Mobile Money Operation (“MMO”) License
Switching and Processing License

In addition to outlining the categories of Nigeria Payments Service Provider Licenses, the Circular also introduces several important provisions for the fintech industry to take note of:

Exclusive Fund Handling by MMOs: Only MMOs are authorized to hold customer funds. Other fintech entities, like PSSPs, are no longer permitted to retain customer funds.
Separate Framework for Switching Companies and MMOs: Combining switching and MMO operations within the same organization is currently prohibited. These operations can, however, function as distinct subsidiaries under a holding company, each with well-defined activities.
CBN Approval for Fintech Collaborations: Fintech companies involved in the payment system must obtain approval from the Central Bank of Nigeria before collaborating on products and services with other payment providers, banks, or financial institutions.
Restrictions on Memorandum and Articles of Association: Payment service providers must ensure that the clauses in their Memorandum and Articles of Association (MEMART) align with the permissible operations defined by their licenses.
No-objection Requirement: All fintech entities holding license types covered by the NPS Circular, as well as those seeking new licenses, must obtain a no-objection letter from the CBN’s Payments System Management Department.
Compliance Expectations: Companies seeking new licenses and those with existing Approvals-in-Principle from the CBN must promptly adhere to the provisions outlined in the NPS Circular.

These regulatory changes are crucial for the evolving fintech landscape in Nigeria, offering greater clarity and structure to the payment services sector.

What are the benefits of obtaining a Nigeria Payments Service Provider License?

The recent NPS Circular has significant implications for the fintech industry, with potential structural changes on the horizon in the coming months. Some of these noteworthy implications include:

Nigeria Payments Service Provider License: Fintech companies can leverage the Nigeria Payments Service Provider License to engage in a wide range of activities, positioning themselves as influential players within the ecosystem.
Enhanced Regulatory Oversight: In the past, some fintech firms collaborated with banks to introduce new products and services while possibly skirting certain regulatory constraints imposed by their licenses. With the new requirement for fintech firms to seek approval from the Central Bank of Nigeria (CBN) for collaborations, the CBN can now scrutinize proposed offerings to ensure they align with the parties’ licenses and regulatory provisions.
Regulatory Sandbox Opportunities: The introduction of a regulatory sandbox allows innovators and fintech companies to apply for testing their novel products and services within a controlled environment. With no share capital restrictions, this development offers startups and entrepreneurs the chance to have their innovations evaluated by the CBN.
Clarity on Permissible Services: The NPS Circular clearly defines the services that various payment businesses can undertake, reducing ambiguity regarding fintech activities. Notably, it establishes that only Mobile Money Operators (MMOs) can hold customer funds and prohibits them from commingling their activities with switching services.
Minimum Share Capital Requirements: The circular explicitly outlines the minimum share capital requirements for different payment systems. This transparency enables industry participants to assess whether they need to recapitalize to obtain additional licenses and meet the minimum share capital criteria for their desired category of Nigeria PSP License.

In conclusion, the NPS Circular introduces changes that bring more transparency and regulatory oversight to the fintech sector in Nigeria, potentially reshaping the industry landscape in the coming months.

Scope of different types of Nigeria Payments Service Provider Licenses

Payment Solutions Service Provider (PSSP) License

A PSSP license is one of the four primary categories of payment system licensing in Nigeria, as regulated by the Central Bank of Nigeria (CBN) through its Circular Ref No. PSM/CIR/GEN/CIR/01/22 issued on December 9, 2020. The PSSP license falls under the Payment Solution Services (PSSs) category, granting holders the authority to engage in various financial activities. These include payment processing gateway and portal management, payment solution and application development, merchant services aggregation, and collections.

This category encompasses Payment Solution Service Providers (PSSPs), Payment Terminal Service Providers (PTSPs), and Super Agents. Institutions seeking a PSS license can opt for one or all three of these licenses. PSSPs are primarily responsible for deploying payment gateways through online channels, while PTSPs focus on Point of Sale (POS) terminal deployment, ownership, and support. Super Agents, on the other hand, are licensed entities that recruit agents for agency banking, which involves offering financial services on behalf of banks within local communities.

It’s important to note that a PSSP licensee is not authorized to hold customer funds, issue e-money, or create wallets. If a fintech company operating payment system services intends to engage in any of these activities, it must apply for a Mobile Money Operations (MMOs) license from the CBN and be registered with the Corporate Affairs Commission (CAC) with a paid-up share capital of N2 billion, as opposed to the N100 million required for a PSSP license.

Payment Terminal Service Provider (PTSP) License

Payment Terminal Service Providers are fintech companies licensed to provide services related to POS terminal deployment, support, and maintenance. Notable examples of PTSPs in Nigeria include Interswitch Limited, IntelliFin Solutions Ltd, and Fidesic Nigeria Limited.

Payment Solution Service (PSS) License

Payment solution services involve providing essential infrastructure, end-to-end electronic payment solutions, systems, and services to stakeholders within the financial services sector. Many operators in this category are integrated into card schemes and core banking systems.

The NPS Circular states that obtaining a Payment Solution Services (PSS) License allows entities to carry out the activities of Super Agents, Payment Terminal Service Providers (PTSPs), and Payment Solutions Service Providers (PSSPs).

Mobile Money Operation (MNO) License

Mobile money is a technology that enables customers to receive, store, and spend money using a mobile phone. MMOs develop and deploy financial services via mobile phones and mobile telephone networks. Prominent MMOs in Nigeria include Opay, Paga, Konga Pay, and Palm Pay.

MMOs permit users to save, receive, and spend money conveniently through their mobile phones. Authorized activities under this category encompass wallet creation, electronic money issuance, agent recruitment, non-bank acquiring services, card acquiring services, local and cross-border payments, and remittance services, among others. However, MMOs are restricted from offering loans, advances, guarantees, accepting foreign currency deposits, engaging in the foreign exchange market beyond permissible limits, or undertaking insurance underwriting.

The NPS Circular specifies a minimum share capital requirement of two billion Naira (N2,000,000,000) for MMOs. These operators can issue electronic money (e-money), create and manage wallets, and oversee pool accounts, along with performing activities that align with a Super-Agent license.

Switching and Processing License

A switching license is highly valued within the Nigerian fintech landscape. Switching companies play a crucial role in facilitating the exchange of value among financial service providers, merchants, customers, and other stakeholders. They serve as intermediaries, routing payment transactions between multiple acquirers and payment service providers.

The NPS Circular mandates a minimum share capital requirement of two billion Naira (N2,000,000,000) for Switching and Processing Companies. These entities are authorized to conduct various activities, including switching, card processing, transaction clearing and settlement agent services, and non-bank acquiring services. Moreover, Switching and Processing companies are now empowered to engage in activities covered by Super-Agent, Payment Terminal Service Provider (PTSP), and Payment Solutions Service Provider (PSSP) licenses.

What are the activities allowed under different Nigeria Payments Service Provider Licenses?

Nigeria Payments Service Provider (PSP) License Activities

A Nigeria Payments Service Provider (PSP) License offers the flexibility to engage in a range of activities:

Super Agents: Super Agents are permitted to carry out activities such as agent recruitment, management, and other functions outlined in the Regulatory Framework for Licensing Super Agents in Nigeria.

MMOs (Mobile Money Operators): MMOs have the authority to engage in activities such as e-money issuance, wallet creation and management, and pool account management. In addition, MMOs are allowed to conduct all the activities of a Super Agent.

PTSPs (Payment Terminal Service Providers): PTSP licensees can provide services including POS terminal deployment and services, POS terminal ownership, Payment Terminal Application Developer (PTAD), merchant and agent training, as well as support services.

PSSPs (Payment Solutions Service Providers): PSSPs have the capacity to participate in various activities, including payment processing gateway and portal management, development of payment solutions and applications, and the provision of merchant service aggregation and collections services.

Switching and Processing: Switching and Processing companies (Switch Cos) are authorized to perform essential functions like switching, card processing, clearing transactions and acting as settlement agents. They can also offer non-bank acquiring services, in addition to the activities listed for Super Agents, PTSPs, and PSSPs.

What are the regulatory and informational requirements for obtaining a Nigeria Payments Service Provider License?

Requirements for Company Formation in Nigeria

When proceeding with the registration of your company in Nigeria, it is essential to provide the following information:

Company Name: Suggest two proposed names for your company.
Registered Address: Specify the proposed registered address of your company.
Nature of Business: Provide a concise description of your business activities.
Share Capital: Depending on the type of payment service provider license you are applying for, state the required share capital.
Directors: You need at least two directors, including one executive director who must be a resident of Nigeria. If required, Fionza Consultants can assist in providing nominee director services.
Shareholders: At least two shareholders (individuals or companies) are required.
Company Secretary/Resident Agent: Appoint a company secretary or resident agent.
Shareholder Information: Furnish full names, contact addresses, email addresses, phone numbers, date of birth, occupations, and electronic signatures of shareholders. Include the distribution of shares among subscribers.
If a Company is a Shareholder: Provide a copy of the company’s incorporation certificate, a board resolution approving the acquisition of shares, and the electronic signature of the representative.
Director and Shareholder Identification: Include copies of government-issued identity cards or the bio-data page of the passport for proposed directors and shareholders.

Capital Requirements:

The Central Bank of Nigeria, as of May 21, 2021, issued new license requirements for the payments system in Nigeria. These requirements include:

Switching and Processing License: Requires a capital of two billion Naira (N2,000,000,000) in shareholders’ funds unimpaired by losses, along with a refundable escrow deposit of two billion Naira (N2,000,000,000) in the CBN PSP Share Capital Deposit Account.
Mobile Money Operation (MMO): Mandates two billion Naira (N2,000,000,000) in shareholders’ funds unimpaired by losses and a refundable escrow deposit of two billion Naira (N2,000,000,000).
Payment Solution Service (PSS): Requires two hundred and fifty million Naira (N250,000,000) in shareholders’ funds unimpaired by losses and a refundable escrow deposit of two hundred and fifty million Naira (N250,000,000).
Payment Terminal Service Provider (PTSP): Demands one hundred million Naira (N100,000,000) in shareholders’ funds unimpaired by losses and a refundable escrow deposit of one hundred million Naira (N100,000,000).

Nigeria Payments Service Provider License Application and Requirements:

The application for a PSSP license should be addressed to the Director of Payments System Management Department at the Central Bank of Nigeria. It should be accompanied by:

Incorporation documents certified by the Corporate Affairs Commission.
Audited financial statements.
Proof of payment of shareholders’ (Escrow) fund and application fee.
Business-related documents, including company profile and business plan.
Risk management and IT policies.
Dispute resolution framework and contingency plan.
Draft agreements with technical partners, banks, or other parties.
Tax Identification Number (TIN) and Tax Clearance Certificate (TCC) for the last three years.
Personal details of directors and top management team.

Ensure that all required documents are in order to facilitate a smooth company registration process in Nigeria.

How to apply for a Nigeria Payments Service Provider License?

Fionza Consultants: Your Partner for Nigerian Company Registration and PSP License

Fionza Consultants is your trusted partner for streamlining the process of registering a Nigerian company and obtaining a Nigeria Payments Service Provider (PSP) License from the Central Bank of Nigeria (CBN). Our comprehensive services include:

1. Company Registration Assistance (2 Weeks):

We provide a local company address for international clients.
Our team offers local nominee director and company secretary services.
We facilitate the registration process with the Nigeria Corporate Affairs Commission (CAC).

2. Corporate Bank Account Setup (4 Weeks):

We assist in opening a corporate bank account with a reputable Nigerian bank.
This account will be used to deposit the minimum paid-up capital required for the CBN Escrow account.
In just four weeks, we secure the bank account and provide internet banking tokens for our international clients.

3. Comprehensive Business Plan and AML/CFT Policies:

We help international clients prepare a robust business plan.
Our experts assist in developing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) policies.
We ensure compliance with technology risk management, cyber hygiene, and regulatory reporting.

4. Physical Office Sourcing and Lease Agreement:

Fionza Consultants locates a suitable physical office space.
Our legal team prepares a lease agreement adhering to local real estate regulations.
Clients pay monthly rent directly to the landlord.

5. Resident Director and Executive Director Services:

We fulfill the requirement for at least one resident director through our nominee director services.
If needed, we aid in recruiting a local executive director, conducting initial screenings, and preparing employment contracts.
Clients participate in the final interview to select their preferred candidate.

6. Recruitment Support for Key Positions:

We can assist in hiring a Compliance Officer, Chief Technology Officer, and Chief Information Security Officer.
Our services include candidate sourcing, interviews, and employment contract preparation.
Monthly salaries are paid directly to employees.

7. License Application and Approval (2 to 3 Months):

Fionza Consultants submits the license application to the CBN for approval.
We anticipate receiving in-principle approval within 2 to 3 months upon submission.
In case of additional document requirements, we promptly prepare and submit them to prevent any delays.

Fionza Consultants is committed to simplifying the process of establishing your Nigerian company and obtaining the PSP License, ensuring a smooth and compliant entry into the Nigerian market.

How long does it take to obtain a Nigeria Payments Service Provider License?

Nigeria Payments Service Provider License Application Process

Once all required documents and payments are in order, the application process for the Nigeria Payments Service Provider (PSP) License proceeds as follows:

1. Initial Application Submission:

All necessary documents and payments, except for the N1,000,000 license fee, are submitted at the time of application.

2. Pre-License Audit and Presentation:

After the application submission, the applicant company is scheduled for presentation.
A team of Central Bank of Nigeria (CBN) staff conducts a pre-license audit at the applicant’s business address.

3. Approval-In-Principle (AIP):

Following the audit, the CBN may issue an Approval-In-Principle (AIP).
The timeline for AIP issuance depends on factors such as document completeness, compliance with CBN guidelines, responsiveness to CBN queries, and the Committee of Governors’ (COG) meeting schedule.
Typically, the AIP is granted within 2 to 3 months after the application filing and is valid for a maximum of 6 months.

4. Testing and Platform Verification:

The AIP allows the applicant company to engage in testing, connect with relevant organizations, implement necessary security features, and address functional challenges on the payment solution platform.
This stage does not grant permission for full business operations.

5. Final License Issuance:

When the applicant company is ready to go live, the CBN team returns to assess readiness and recommend adjustments if needed.
If the CBN team is satisfied with the outcome and the applicant pays the N1,000,000 license fee, the CBN may issue the Final Nigeria Payments Service Provider License.
Typically, the Final License is granted within 6 to 8 months from the date of the license application filing.

The Nigeria Payments Service Provider License application process involves multiple stages, including the AIP phase, which allows for platform testing and preparation before receiving the final license for full-scale operations. The timeline for each phase depends on various factors, with a focus on compliance, document completeness, and CBN’s internal procedures.

How much does it cost to obtain a Nigeria Payments Service Provider License?

Nigeria Payments Service Provider (PSP) License Fees

For all types of Nigeria Payments Service Provider licenses, there is a standard one-time application fee of one hundred thousand Naira (N100,000). Additionally, a licensing fee of one million Naira (N1,000,000) is payable upon the issuance of the final license.

Total Engagement Fee with Fionza Consultants

The total engagement fee for acquiring a Nigeria PSP License varies depending on the specific services you require from Fionza Consultants. Our services encompass the entire process, from assisting with company incorporation to obtaining the necessary payment license. This comprehensive fee includes company registration charges, licensing fees, and any incidental costs that may arise during the process.

Before commencing the registration process, we engage in a detailed discussion with you to clarify the total engagement fee. This ensures that you have a clear understanding of the services covered by the fee and the overall cost structure.

At Fionza Consultants, transparency in pricing is a priority, and we aim to provide you with a comprehensive breakdown of costs associated with obtaining your PSP License.

Our services

Simplify Your Nigeria Payments Service Provider (PSP) License Application

Navigating the intricacies of obtaining a Nigeria Payments Service Provider (PSP) License can be overwhelming, especially when unfamiliar with the country’s regulations. At Fionza Consultants, we offer a seamless experience for PSP license application, allowing you to focus your efforts on other critical aspects of your business.

Our team of licensing consultants is well-versed in the relevant laws and regulations, ensuring a smooth and professional process from the inception of your entity in the chosen jurisdiction to effective negotiation and collaboration with regulatory and governmental authorities, ultimately leading to a successful license acquisition.

In addition to PSP licenses, Fionza Consultants specializes in supporting the attainment of various offshore financial licenses. Our expertise and commitment to professionalism make us your trusted partner in regulatory compliance and licensing endeavors.

Find out more!

Contact us to find out more about how to secure a Nigeria PSP License. Our team of experts will revert within the next 24 hours.

FAQ

How can I get a PSSP license in Nigeria?

To get any type of Nigeria payments service provider license you will first need to set up an entity in Nigeria according to your business goal and the licensing requirements with the Corporate Affairs Commission. Once registered, you will be required to deposit the required minimum capital amount and apply for a Nigeria PSP with the relevant documents to CBN.
Fionza Consultants is proficient in providing assistance to our international clients in obtaining payment licenses. We make sure that our clients get the approval and payment licenses in a shorter period of time while taking care of all the regulatory requirements and preparation of documents.

Can you apply for a Nigeria payments service provider license online?

Fionza Consultants ensures that the process of applying for a Nigeria payments service provider license can be carried out remotely or with minimal travel solutions.

What are payment service providers in Nigeria?

A payment service provider (PSP) is a third-party organization that offers payment services to businesses that accept online payment methods. Credit cards, debit cards, e-wallets, cash cards, bank transfers, and other payment methods may be used.

Nigeria Payments Service Provider License