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HomeBusinessNigeria's central bank issues new guidelines for Payment providers

Nigeria’s central bank issues new guidelines for Payment providers

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The Central Bank of Nigeria (CBN) has categorised the newly established Payment Service Providers (PSP) into four categories and spelled out a new capital requirement for them.

The regulatory bank in a circular issued by its Director of Payment System Management Department, Musa Jimoh put the new capital requirement for mobile money operations as well as switching and processing companies at N2 billion respectively.
The circular dated December 9, 2020, stipulated that the minimum capital requirement for Payment Solution Services (PSS) is now N250 million while that of super-agents is now N50 million.

The Payment Terminal Service Providers (PTSP) and Payment Solutions Service Providers (PSSP) are required to have N100 million minimum capital respectively.

According to the CBN, the move was in line with its commitment to promote a strong and credible payment system.

“The new licensing framework offers clarity for new and existing market participants given the significant evolution and innovation in the Nigerian payment system,” it added.

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The regulatory bank said the payment system licensing has been streamlined into four broad categories. These it listed to include switching and processing; Mobile Money Operations (MMOs); PSS and Regulatory Sandbox.

“Only MMOs are permitted to hold customer funds. Companies with licences within any of the other categories are not permitted to hold customers’ fund.

Companies seeking to combine activities under switching and MMO categories are strongly permitted to operate under a holding company structure with the subsidiary entities delineated to prevent co-mingling.

“Payment system companies in the PSS category may hold any of PSSP, PTSP and super-agent licence or a combination of the licences thereof. All licensed payment service providers in any of the categories covered by this framework holding or seeking any other CBN issued licences are required to obtain a no-objection from the Payment System Management Department.

“The object clauses in the Memorandum and Articles of Association of Payment Service Providers shall be limited to the permissible activities under their licensing authorisations. Collaboration between licensed payment companies, banks and other financial institutions in respect of products and services are subject to CBN’s prior approval.

“All new licensing requests including those with approval-in-principle are to comply with the new requirements immediately. Existing licensed payment companies are to comply with the new licensing requirements where applicable not later than the end of June 2021,” the CBN stated in the circular.

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