On 10th December 2020, the Central Bank of Nigeria (“CBN”) issued a Circular dated 9th December 2020 on a new licence categorisation for payments system in Nigeria (“Circular”). It is instructive to mention that the CBN issued an exposure draft on the licensing regime for payment service providers in 2018, however, the substantive circular was not issued.
The approval delay over the past couple of years created fear and apprehension for existing market players, not leaving out potential investors in the Nigerian payments industry. Certainly, this Circular will bring a huge relief to all concerned, as it now provides the much-needed clarity on licence categories for participants and applicable minimum capital requirements. It’s also a very welcome development to see that the high minimum capital thresholds previously set out in the exposure draft have been significantly reduced for some of the categories.
We have taken the liberty to highlight the provisions of the Circular for your information.
Under the new Circular, payments system licencing has been streamlined into four categories, and these are:
- Payment Solution Services (“PSS”)
- Mobile Money Operators (“MMOs”)
- Switching and Processing; and
- Regulatory Sandbox
We have outlined the permissible activities below, and the minimum capital requirements for each licence category: