In December 2020, the Central Bank of Nigeria (the "CBN") published a circular on the licence categorisations for operators in the Nigerian payments system (the "Circular"). Pursuant to the Circular, the payments licensing framework was streamlined into 4 (four) broad categories of permissible activities, namely:

(a) Regulatory Sandbox;

(b) Switching and Processing;

(c) Mobile Money Operations ("MMOs"); and

(d) Payment Solution Services (PSSs).


Below is a table showing a summary of the licence changes provided by the Circular:


Licence Category

Old Permissible Activities and Minimum Capital

New Permissible Activities and Minimum Share Capital


Mobile Money Operation

(a) Cash- in, Cash- out services;

(b) Agent recruitment and management;

(c) Wallet creation and management;

(d) Pool account management;

(e) Airtime Top-up;

(f) Opening of wallet accounts;

(g) International remittance with TED approval;

(h) Bill Payments;

(i) Salary Payments; and

(j) Other VAS

In addition to the old permissible activities for MMOs, MMOs can now also carry out Super-Agent activities.

Minimum Capital – N2,000,000,000.00

Minimum Capital – N2,000,000,000.00


Switching and Processing

(a) Switching,

(b) Card Processing; and

(c) Transaction clearing and Settlement Agents services.

In addition to the old permissible activities for Switches and Processors, Switching and Processing companies can now also carry out non-bank acquiring services as well as Super-Agent, PSSP and PTSP permissible activities.

Minimum Capital – N100,000,000.00

Minimum Capital – N2,000,000,000.00


Payment Service Solution Provider (PSSP)

(a) Payment gateway and portals;

(b) Payment solution/application development for the purpose of enabling e-collections and disbursements; and

(c) Merchant Service aggregation and collections.


No changes

Minimum Capital – N100,000,000.00

Minimum Capital – N100,000,000.00


Payment Terminal Service Provider (PTSPs)

(a) POS Terminal deployment, support and maintenance;

(b) POS Terminal ownership;

(c) Payments Terminal Application Development;

(d) Merchant/agent training and support; and

(e) Value added services.

No changes.

Minimum Capital – N100,000,000.00

Minimum Capital – N100,000,000.00



(a) Bills payment (utilities, taxes, tenement rates, subscription etc.);

(b) Payment of salaries;

(c) Funds transfer services (local money value transfer);

(d) Balance enquiry;

(e) Generation and issuance of mini statement;

(f) Collection and submission of account opening and other related documentation;

(g) Agent mobile payments/banking services;

(h) Cash disbursement, cash repayment of loans and cash payment of retirement benefits;

(i) Cheque book request and collection; and

(j) Collection of bank mail/correspondence for customers.

No changes

Minimum Capital – N50,000,000.00

Minimum Capital – N50,000,000.00


Payment Solutions Services (PSS)

Not applicable

A holder of a PSS licence is permitted to carry on the permissible activities of PSSPs, PTSPs and Super-Agent.

Minimum Capital – N250,000,000.00



3.1 Regulatory Sandbox

In line with the objective of the CBN to encourage innovation in the financial services sector, the CBN has implemented the Regulatory Sandbox which is aimed at stimulating innovation and deepening financial inclusion. Essentially, a company may apply to the CBN under this category, further to which the CBN would review the products and solutions of the applicant (which may be licensed institutions, FinTech companies, innovators and researchers) during implementation. Unlike the other categories, there is no minimum capital requirement under this category.

3.2 CBN No-Objection

All licensed payment service providers in any of the categories above, holding or seeking to hold any other CBN-issued licences are now required to obtain a no-objection from the Payment System Management Department of the CBN. This no-objection is aimed at ensuring that all payment service providers are in compliance with the Circular.

3.3 Holding Company Structure

Any company that wishes to operate as both a Switch and an MMO must do so under a holding company structure, such that the switching company is separate from the MMO company. This is important to maintain neutrality of switching companies, amongst other concerns.

3.4 Collaboration in the FinTech Ecosystem

Under the Circular, any collaboration between licensed payment companies, banks and other financial institutions in respect of any product(s) and/or service(s) is now subject to prior approval of the CBN. This seems to have stemmed from the numerous collaborations and strategic partnerships between FinTech entities and banks, some of which are often used to evade regulatory restrictions and requirements. Although there is the argument that this requirement could adversely impact the adoption of innovation in the FinTech sector, the CBN is of the view that this requirement may further protect the financial stability of the economy by reducing the risks associated with collaborations that allow licensed entities operate outside their licensing conditions and framework.

3.5 Holding of Funds

The Circular prescribes that only MMOs are permitted to hold customer funds. This now clarifies the issue of whether PSSPs can hold funds.

3.6 Payments Licencees Compliance Obligations

While all new licensing requests (including those with approval-in-principle) are to comply with the new licensing requirements immediately, all existing licensed payment companies are required to comply with the new licensing requirements (where applicable) no later than 30th June 2021.


Through the Circular, the CBN has taken the initiative to harmonise the various payment system regulations. This addresses the demand that FinTech companies be allowed to consolidate some of their services without having to apply for multiple licenses from the CBN, given their technological capacity. Accordingly, many FinTech companies will have to undertake a recapitalisation process to satisfy the CBN's capital requirements. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.