Exposure Draft Of New CBN Licensing Regime For Payment System Providers

Proshare - Facebook Proshare - Twitter Proshare - Linked In Proshare - WhatsApp

Thursday, October 18, 2018 11:41 AM / CBN


Financial Technology companies (FinTechs) have been evolving with innovative products which are gaining acceptance within the country and banks have been collaborating with these technology companies, in order to remain competitive in the financial services ecosystem. 

The emergence of Financial Technology Companies (FinTechs) in the financial system' accentuates the known risks within the financial system. In particular, the operational risk dynamics within the financial system is fast evolving with an increasing reliance on FinTech platforms and the, growing Level of acceptability of their services by both traditional financial service providers (Banks) and consumers or financial services (the public). 

In view of the above, the CBN has considered and hereby proposes new licensing regime for all categories of payment service providers and financial technology companies. It is our belief that the proposed structure, if implemented, will properly position the Bank to adequately address the emerging issues of FinTech with respects to cyber risks, risk management framework, capital adequacy, better focused regulation and oversight operations.


1. Proposed Licensing Structure 

The proposed licensing structure is highlighted on the following pages. 

Proshare Nigeria Pvt. Ltd. 


2. Points to Note

a. Once the new license regime is implemented, companies shall be expected to notify the Bank before starting any new activity under its licence category. E.g. a Super licence holder who initially had been approved for only PSSP and Switching operations, must inform the Bank (for information purposes only) if it subsequently decides to commence PTSP operations. 

b.  PSPs that perform merchant service aggregation functions shall not hold    settlement funds of the merchant. The merchant service aggregator process shall only facilitate settlement by providing the acquirer with the necessary settlement files to complete settlement


3. Consideration for Mutual Exclusivity of Some Licenses           

a.  Card Scheme/Switching: It is important that any entity rendering Switching service does not render card scheme service and vice versa. This is to avoid a situation where a Switch prioritizes its own card scheme transactions to the detriment of others/ competitors. Section 2.4.10 of the Current Guidelines on Transaction Switching in Nigeria, prohibits Switching companies from issuing payment cards. 

b.      MMO/Switching: It is equally important that MMOs do not render switching services and vice versa. This is to avoid a situation where a Switch prioritizes its scheme transactions to the detriment of others/competitor’s.


Kindly review the aforementioned and forward your inputs to the Director, Banking & Payments System Department and pspo@cbn.gov.ng not later than October 29, 2018.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Related News

1.       CBN Proposes N5bn Capital Requirement For Payment Service Banks

2.      CBN Publishes Guidelines For Licensing and Regulation of Payment Service Banks in Nigeria

3.      Natural Language Processing in Banking – Current Applications

4.      The World Federation Of Exchanges Responds To Global Financial Network (GFIN) Consultation

5.      FirstBank To Host FinTech Summit on Oct 17 - The Future of Banking – the Role of AI and Big Data

6.      Britain Can Become The Natural Global Home For Fintech

7.      Consumer Insights can Reform Digital Banking in Nigeria – Agusto and Co

8.     Fintech Association of Nigeria Kicks-off Fintech Learning Series with SEC

9.      The Big Blockchain Lie

10.  Coinbase Is Shutting Down Its Fund Aimed At Big Investors As It Pivots To A New Retail Product

11.   Crypto is the Mother of All Scams, While Blockchain Is The Most Over-Hyped Technology Ever


Related News