Nigeria Payments Service Provider License
Securing a Nigeria Payments Service Provider License opens up lucrative opportunities in one of Africa's most dynamic financial sectors. With the rapid rise in digital payment transactions and increasing investments from banks, telecoms, and fintech companies, Nigeria's payment landscape is expanding at an exponential rate. As such, many international businesses are looking to enter this growing market.
Block3 Finance helps guide businesses through the licensing process, ensuring that you meet all regulatory requirements for a smooth and successful operation within Nigeria's payments ecosystem.
What Are the Laws Governing the Issuance of a Nigeria Payments Service Provider License?
The fintech sector in Nigeria has grown significantly, yet the lack of a clear licensing structure for payment services posed a challenge. In December 2020, the Central Bank of Nigeria (CBN) released a Circular that clarified the new licensing categories for payment service providers, addressing earlier regulatory uncertainty.
These regulations have reduced the ambiguity surrounding which license applies to specific payment services. The CBN's updated classification has provided much-needed clarity, and the previously high capital requirements have been significantly reduced for several categories.
Categories of Nigeria Payments Service Provider Licenses
The CBN has introduced various categories of licenses for businesses offering payment services in Nigeria. These licenses are based on the scope of the services the company intends to provide:
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
Key Provisions in the Payment Systems Circular
MMOs are the only providers allowed to hold customer funds. Other payment service providers, such as PSSPs, are prohibited from retaining consumer funds.
Switching companies and MMOs must operate within separate entities under a holding company structure to ensure distinct operational functions.
Collaboration with financial institutions requires CBN approval. Payment service providers must acquire CBN clearance before partnering with banks or other payment businesses.
Clear activity restrictions in the Memorandum and Articles of Association (MEMART). Payment service providers must align their objectives with the services permitted under their licenses.
Benefits of Obtaining a Nigeria Payments Service Provider License
Obtaining a Nigeria Payments Service Provider License offers several advantages, including:
Early Market Entry: Gain a competitive advantage by entering Nigeria’s rapidly expanding payments ecosystem before the regulatory framework becomes fully developed.
Clearer Licensing Framework: The new regulations clarify permissible activities and set clear requirements, minimizing uncertainty for operators.
Regulatory Sandbox: Fintech companies can apply to test new products in a controlled regulatory environment before full-scale deployment.
International Exposure: Being licensed in Nigeria boosts credibility and attracts global investors seeking innovative, licensed payment service providers.
Scope of Different Nigeria Payments Service Provider Licenses
Payment Solutions Service Provider (PSSP) License PSSP license holders can engage in activities such as:
Payment gateway and portal processing
Merchant services aggregation and collections
Payment solution/application development
However, PSSPs are not allowed to hold customer funds or issue electronic money (e-money). If a company intends to provide these services, it must apply for a Mobile Money Operations (MMO) license.
Payment Terminal Service Provider (PTSP) License: PTSP license holders focus on providing POS terminal deployment, support, and maintenance services.
Payment Solution Service (PSS) License: PSS license holders provide infrastructure and solutions such as card scheme integration and core banking systems for the financial services industry.
Mobile Money Operations (MMO) License: MMOs enable users to save, receive, and spend money via mobile phones. They can issue e-money, create and manage wallets, and offer local and cross-border payments, among other services.
Switching and Processing License: Switching companies facilitate payment routing between various stakeholders. They can process cards, handle transaction clearing and settlements, and provide acquiring services.
Regulatory and Informational Requirements for Obtaining a Nigeria
Payments Service Provider License
Company Formation Requirements
Two proposed company names
A registered company address in Nigeria
Share capital (depends on the type of license)
At least two directors (one must be a resident Nigerian)
At least two shareholders (individuals or companies)
A company secretary/resident agent
Capital Requirements
Switching and Processing License: ₦2 billion (shareholder funds unimpaired by losses), plus an escrow deposit of ₦2 billion.
Mobile Money Operations (MMO): ₦2 billion in shareholder funds, plus an escrow deposit of ₦2 billion.
Payment Solution Service (PSS): ₦250 million in shareholder funds, plus a refundable escrow deposit of ₦250 million.
Payment Terminal Service Provider (PTSP): ₦100 million in shareholder funds, plus an escrow deposit of ₦100 million.
How to Apply for a Nigeria Payments Service Provider License
Company Registration: Block3 Finance will assist with registering your company with the Corporate Affairs Commission (CAC) in Nigeria. The process takes about 2 weeks.
Open a Corporate Bank Account: We’ll open a corporate bank account in Nigeria for your business and deposit the required share capital into the CBN escrow account.
Prepare the Required Documents: Our team will help you prepare the necessary documents, including a detailed business plan, AML/CFT policies, and risk management frameworks.
Submit the Application: After preparing all documents, we will submit your application to the Central Bank of Nigeria (CBN).
Receive Approval: The CBN will conduct a pre-license audit and grant an Approval-in-Principle (AIP) within 2-3 months. Upon satisfying all requirements, the final license will be issued.
How Long Does It Take to Obtain a Nigeria Payments Service Provider License?
The timeline for obtaining a Nigeria Payments Service Provider License is approximately 6 to 8 months from the date of application submission. This includes the Approval-in-Principle (AIP) stage, which is typically granted within 2-3 months.
Cost to Obtain a Nigeria Payments Service Provider License
Application Fee: ₦100,000 (non-refundable)
License Fee: ₦1,000,000 (payable after AIP approval)
Additional fees for company registration, document preparation, and compliance support may apply.
Why Choose Block3 Finance to Secure Your Nigeria Payments Service Provider License?
Block3 Finance offers comprehensive support throughout the application process, from company formation to securing your Nigeria Payments Service Provider License. Our experts will ensure that your business complies with all regulatory requirements, guiding you through each step with professionalism and transparency.
Find Out More!
For more information or to start the licensing process, contact Block3 Finance today. Our team will respond within 24 hours to help you get started.
