Wherever you find money and technology mix, what you get is a lot of innovation and dynamism. As Financial Technology (FINTECH) keeps being popular the world over, and evolving, so do regulations and regulators.
Remember, regulators are here to protect us and for the Fintech space in Nigeria, the Central Bank of Nigeria (CBN) creates standards and frameworks that ensure that we’re serving the customers the right way. The CBN on 24th May 2021, updated the categories and license requirements for Fintechs within the Nigerian Payments System via a circular (“the Circular”).
Here are some changes made by the circular:
Updates & Changes
The circular provides the license requirements for the various categories of fintechs in Nigeria as opposed to the 2020 categorization document published by the CBN in December 2020 which represented the categorization and certified activities of these payment systems alongside their capital requirements.
How the Circular Organises the Nigerian Payment Systems
- Switching & Processing;
- Mobile Money Operator(MMOs);
- Payment Solution Services;
- Payment Terminal Service Provider (PTSP);
- Payment Solution Service Provider (PSSP);
- Super Agents; with no mention of the Regulatory Sandbox.
The 2020 Categorization document provides for all of the above including the Regulatory Sandbox, however, the key update is that PTSP, PSSP and Super Agents are sub categorized under Payment Solution Services.
Requirements of the various Payment Systems
In the May 24th 2021 circular, the requirements of the various Payment Systems were catalogued into eligibility, capital requirement, contact, documentary requirement, application and licensing fees, license validity. In the 2020 Categorization Document, all that was catalogued was minimum capital, put differently capital requirement, and permissible activities.
Implication of the Circular
What is the implication of this circular on FINTECHs like Flutterwave? Nothing. Well, that is for companies that are already compliant with the existing license categorization requirements of CBN. For those that are not, the circular is a gift that clearly informs Fintechs/ Payment Systems on requirements and expectations that are to be complied with by June 30th 2021.
However, FINTECHs will do well to review of their compliance status in line with this circular, with special reference to the extensive documentary requirements. With this consolidation, it is expected that FINTECHs select and stay within their choice license category and ensure compliance with the stipulated requirements.
No material change has been noted in the circular, not even with the capital requirements, the changes recorded are mostly structural for purposes of organization, clarity and better monitoring. In the history of license categorization requirements for FINTECHs published by the CBN, this circular has been the most comprehensive yet.