How African Market Entry Consulting Limited (Company Formation NG) Can Assist Clients in Securing a Fintech License from the Central Bank of Nigeria

Understanding the different categories of fintech licenses, their requirements, and applicable use cases is crucial for choosing the right license and ensuring compliance with CBN regulations. By leveraging our expertise and resources, clients can successfully enter the Nigerian fintech market, delivering innovative financial solutions and contributing to the country's economic growth. African Market Entry Consulting Limited, trading as Company Formation NG, is a leading business setup and compliance agency based in Lagos, Nigeria.

?

Understanding the Fintech Licensing ecosystem in Nigeria

The Role of the Central Bank of Nigeria

The Central Bank of Nigeria (CBN) is the primary regulatory body overseeing financial institutions in Nigeria, including fintech companies. The CBN's mandate includes maintaining monetary and financial stability, promoting a sound financial system, and fostering economic development. To operate legally, fintech companies must obtain the appropriate licenses from the CBN, which ensures they comply with regulatory standards and protect consumers' interests.

?

Categories of Fintech Licenses in Nigeria

The CBN offers various categories of fintech licenses tailored to different types of financial services. These licenses include:

• Payment Service Provider (PSP) License
• Mobile Money Operator (MMO) License
• Super Agent License
• Payment Terminal Service Provider (PTSP) License
• Payment Solution Service Provider (PSSP) License
• Switching and Processing License
• International Money Transfer Operator (IMTO) License

Each license category has specific requirements and use cases, which we will explore in detail.

?

How We Can Assist Clients in Securing a Fintech License

Company Formation NG provides end-to-end support for clients seeking to secure a fintech license from the CBN. Our comprehensive services encompass the following steps:

1. Initial Consultation and Feasibility Study

The first step involves understanding the client's business model, objectives, and target market. Company Formation NG conducts a thorough feasibility study to assess the viability of the proposed fintech solution within the Nigerian market. This includes analyzing market demand, competitive landscape, and regulatory considerations.

Deliverables

• Feasibility report outlining market opportunities and challenges
• Identification of the appropriate fintech license category
• Preliminary assessment of compliance requirements

2. Business Plan Development

A well-crafted business plan is crucial for securing a fintech license. Company Formation NG assists clients in developing a comprehensive business plan that includes:

• Executive summary
• Business objectives and goals
• Market analysis and target audience
• Product and service offerings
• Marketing and sales strategies
• Financial projections and funding requirements
• Risk management and mitigation strategies

Deliverables

• Complete business plan tailored to the client's fintech solution
• Financial projections and funding strategy

3. Legal and Regulatory Advisory

Navigating the regulatory landscape is critical for securing a fintech license. Company Formation NG provides expert legal and regulatory advisory services, ensuring clients understand and comply with all CBN requirements. This includes:

• Guidance on regulatory framework and compliance obligations
• Assistance with legal entity formation and structuring
• Review of contracts, agreements, and other legal documents
• Advisory on data protection and cybersecurity regulations

Deliverables

• Legal entity registration and documentation
• Comprehensive regulatory compliance checklist
• Draft contracts and agreements

4. License Application Preparation

Preparing a complete and accurate license application is essential for a successful outcome. Company Formation NG assists clients in compiling and submitting all required documents, including:

• Completed application forms
• Proof of capital adequacy
• Detailed business plan and financial projections
• Corporate governance structure and policies
• Information on key personnel and their qualifications
• IT and operational infrastructure details
• Risk management and internal control frameworks

Deliverables

• Compiled and submitted license application package
• Follow-up with CBN to address any queries or additional requirements

5. Post-Licensing Support

Securing a fintech license is just the beginning. Company Formation NG offers ongoing support to ensure clients remain compliant and successfully launch their fintech operations. This includes:

• Compliance monitoring and reporting
• Advisory on regulatory updates and changes
• Support with operational setup and go-to-market strategies
• Assistance with customer onboarding and service delivery

Deliverables

• Ongoing compliance and regulatory advisory
• Operational support and market entry strategy
• Customer onboarding and service delivery framework

Categories of Fintech Licenses in Nigeria: Requirements and Use Cases

1. Payment Solution Service Provider (PSSP)

Services

Offer online and offline payment processing solutions, including collections, check-out, biller aggregation, and payout services.

Use Cases

• Facilitating electronic payments between consumers, merchants, banks, and other financial institutions.
• Offering e-commerce payment gateway services.

Requirements

• As with all other licenses, a PSSP license requires registration of Company with the Corporate Affairs Commission (CAC).
• Minimum shareholder funds: N100,000,000.
• Comprehensive business plan.
• Evidence of technical and operational competence.
• Relevant infrastructure to support payment processing services.

2. Payment Terminal Service Provider (PTSP)

Services

Provide POS terminal support, including installation, repairs, and software updates.

Use Cases

• Deployment and maintenance of Point-of-Sale (POS) terminals.
• Ensuring interoperability and seamless transaction processing.

Requirements

• Minimum shareholder funds: N100,000,000.
• Detailed deployment and maintenance strategy.
• Service Level Agreements (SLAs) with merchants and banks.

3. Super-Agent License

Services

Include cash deposits, withdrawals, fund transfers, bill payments, and account balance inquiries.

Requirements

Minimum Capital Requirement: ?50 million.

Agent Network: Establishment of a wide network of agents across the country.

AML/CFT Compliance: Adherence to AML and CFT regulations and effective monitoring of agent activities.

Use Cases

• Agent Banking: Providing banking services through a network of agents, enhancing financial inclusion in remote areas.
• Cash-In/Cash-Out Services: Facilitating cash deposits and withdrawals through agent locations.

4. Payment Solutions Service (PSS)

Services

Facilitate mobile payments, money transfers, and other banking services via mobile devices.

Use Cases

• Providing specialized payment solutions tailored to specific needs of clients, such as bulk payment processing.
• This is for all three licenses (PSSP, PTSP, and Super Agent)

Requirements

• Minimum shareholder funds: N250,000,000.
• Proof of technical capacity and operational readiness.
• Risk management and cybersecurity frameworks.

5. Mobile Money Operator (MMO)

Services

Facilitate mobile payments, money transfers, and other banking services via mobile devices.

Use Cases

• Enabling mobile phone-based financial transactions.
• Providing financial services to the unbanked and underbanked populations.

Requirements

• Minimum shareholder funds: N2,000,000,000.
• Detailed business and operational plan.
• Technological infrastructure to support mobile money services.
• Anti-money laundering (AML) and combating financing of terrorism (CFT) measures.

6. Switching and Processing License

Use Cases

• Providing infrastructure for routing, switching, and processing electronic transactions.
• Ensuring interoperability among various payment systems.

Requirements

• Minimum shareholder funds: N2,000,000,000.
• Robust technological framework and security systems.
• Detailed business continuity and disaster recovery plans.

7. International Money Transfer Operator (IMTO)

Use Cases

• Facilitating cross-border remittances.
• Enabling international fund transfers for individuals and businesses.

Requirements

• Minimum shareholder funds: N2,000,000,000.
• Compliance with international remittance regulations.
• Effective AML/CFT measures.

African Market Entry Consulting Limited (Company Formation NG) offers a holistic approach to assist clients in this process. From initial consultation and feasibility studies to business plan development, legal advisory, license application preparation, and post-licensing support, Company Formation NG provides end-to-end services tailored to the needs of fintech companies.

For more information, clarification, or engagement, please email: [email protected] or call +2348055981421