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.