PROCEDURE FOR PAYMENT SERVICE PROVIDER LICENSE IN NIGERIA

Obtaining a Payment Service Solution Provider (PSSP) license in Nigeria involves a comprehensive process governed by the Central Bank of Nigeria (CBN). This license allows companies to provide payment services in the financial ecosystem. This article detailed a step-by-step guide on how to obtain a PSSP license in Nigeria:

1. Understand the Regulatory Framework

Before initiating the licensing process, it is crucial to understand the regulatory framework. The CBN issued a guideline for payment service providers in Nigeria, which outlines the operational, technical, and financial requirements for obtaining a PSSP license. This guideline set the foundation for the licensing process.

2. Establish a Business Entity

Before applying for the PSSP license, establish a business entity in Nigeria. The business must be a limited liability company with a minimum of N100,000,000 authorized share capital.

3. Prepare Required Documentation

The application for a PSSP license requires comprehensive documentation, including:

• Business Plan: A detailed business plan outlining your payment services, target market, operational strategy, and financial projections.
• Company Registration Documents: Certificates of incorporation, tax identification number, and relevant business permits.
• Shareholders' Agreement: If applicable, outline the ownership structure and responsibilities of each shareholder.
• Technical Specifications: Documentation of the technology and systems to be used in providing payment services.
• Compliance Framework: A strategy for adhering to regulatory requirements, including anti-money laundering (AML) and combating the financing of terrorism (CFT) guidelines.

4. Financial Requirements

The CBN has stipulated minimum capital requirements for obtaining a PSSP license. As of the last update, applicants must demonstrate a minimum capital base of ₦100 million (Nigerian Naira). The ₦100 million must be deposited in the CBN escrow account.

5. Submit Application to CBN

Once you have compiled all necessary documents and met the financial requirements, submit your application to the CBN. Ensure that you complete the application form accurately and include all required documents. The CBN has an online portal for the submission of applications, which facilitates tracking and communication.

6. Pay the Required Fees

As part of the application process, you must pay a non-refundable application fee. This fee is typically paid at the point of submission and is essential for processing your application. The applicant will also be required to pay a license fee.

7. Engage in the Review Process

After submission, your application will undergo a review process by the CBN. This includes an evaluation of your business model, financial capability, compliance framework, and technology infrastructure. Be prepared to respond to any queries or provide additional information as requested by the CBN.

8. Technical Assessment

The CBN may conduct a technical assessment to evaluate your payment systems and processes. This assessment ensures that your technology meets industry standards for security and efficiency. You may need to demonstrate the effectiveness of your systems in handling transactions, managing risks, and safeguarding customer data.

9. Await Approval and License Issuance

Once your application has passed through the review and technical assessment stages, you will await the final approval from the CBN. If approved, the CBN will issue your PSSP license, which will allow you to operate legally within Nigeria’s payment services sector.

10. Comply with Ongoing Regulatory Requirements

After obtaining your PSSP license, it’s crucial to comply with ongoing regulatory requirements. This includes regular reporting to the CBN, adherence to AML and CFT regulations, and maintaining a sound corporate governance framework. Failure to comply can result in penalties or revocation of your license.

11. Engage with Stakeholders

Once licensed, engage with relevant stakeholders in the payment ecosystem, including banks, financial institutions, and technology providers. Building partnerships can enhance your service offerings and expand your customer base.

12. Maintain Records and Audits

Maintain detailed records of all transactions, customer interactions, and compliance activities. Regular internal audits can help ensure that your operations align with regulatory requirements and best practices. Being proactive in your compliance efforts can prevent issues that may arise during inspections or audits by the CBN.

In closing, obtaining a PSSP license in Nigeria is a rigorous process that requires careful planning, adherence to regulations, and a commitment to compliance. By following these steps and remaining diligent in your operations, you can successfully navigate the licensing process and contribute to the evolving payment services landscape in Nigeria. Engaging with legal advisors can further enhance your chances of a successful application and sustainable business operations.

By Banking & Finance Law Team at Resolution Law Firm

Email: info@resolutionlawng.com

Tel/WhatsApp: +2348099223322