The Central Bank of Nigeria ("CBN"), on the 3rd of August, 2021, issued a circular to all Deposit Money Banks ("DMBs"), Payment Service Providers and Other Financial Institutions ("OFI") on issuance of the Guidelines for Licensing and Regulation of Payment Service Holding Companies ("PSHC") in Nigeria ("the PSHC Guidelines"). The circular is primarily for companies that desire to operate more than one licence category, (switching, processing and/or mobile money services) to set up a Payment Service Holding Company ("PSHC") structure, such that the activities of the subsidiaries are clearly delineated. According to the CBN, the arrangement would prevent commingling of activities, facilitate management of risks and enable the CBN exercise adequate regulatory oversight on all the companies operating within the Group.



A PSHC is defined as a company whose principal object clause includes the business of a holding company set up for the purposes of making and managing equity investment in two or more companies, being its subsidiaries, which are Payments Service Providers across the following categories: (i) Mobile Money Operations (ii) Switching and Processing and (iii) Payment Solution Service.1

The PSHC shall be non-operating, existing solely to carry out investment in approved subsidiaries without engaging in the day-to-day management and operations of subsidiaries.2

The PSHC shall be a corporate body, registered with the Corporate Affairs Commission ("CAC"), and licensed, supervised and regulated by the CBN, and shall have a board size of between 5 and 10 members or as determined by the applicable CBN Corporate Governance Guidelines.

As regards the structure, for any PSHC to emerge, there shall be at the minimum, two subsidiaries, which include a Mobile Money Operator ("MMO") and a Switching company. If a PSHC elects to change to a mono-line payments service provider, it shall seek the prior approval of the CBN, and submit along with its request for approval the following documents:

  • The annual audited financial statements of the immediate past three years under the arrangement/structure it seeks to discontinue
  • Divestment plan from subsidiaries
  • Any other requirements as may be determined by the CBN from time to time.

The CBN is empowered to direct a PSHC to divest from a subsidiary where, in the opinion of CBN, the PSHC is being run in a manner that is detrimental to the subsidiary and/or stability of the financial system.


The promoters of the PSHC are required to submit a formal application for licence, which shall be addressed to the Director; Payments System Management Department of the CBN. The licencing process is in two phases: Approval-in-Principle and Final Licence. However, a financial holding company, with a payment service provider as a subsidiary, that had been licensed prior to the issuance of the PSHC Guidelines, need not apply for a PSHC licence.3


The application shall be accompanied with the following:

  • A non-refundable application fee of N1,000,000.00 (One Million Naira only) or such other amount that the CBN may specify from time to time; payable to the CBN through electronic transfer.
  • Evidence of meeting the prescribed minimum paid-up capital
  • Detailed business plan or feasibility report which shall include certain information stipulated
  • A written and duly executed undertaking by the promoters that the PSHC shall be adequately capitalized for the volume and character of its business at all times, and that the PSHC shall be under the supervisory authority of the CBN, as an Other Financial Institution (OFI).
  • For regulated foreign institutional investors, the CBN shall require a no-objection letter from the regulatory body in the home country
  • Shareholders' agreement providing for disposal/transfer of shares as well as authorisation, amendments, waivers, reimbursement of expenses
  • Statement of intent to invest in the PSHC to be made by each investor in the PSHC
  • Technical Services Agreement, where applicable
  • Draft copy of the Company's Memorandum and Articles of Association


Not later than 6 months after obtaining the AIP, the promoters of a proposed PSHC shall submit an application to the CBN for the grant of a final licence. The application shall be accompanied with the following:

  • Non-refundable licensing fee of N5,000,000.00 (Five Million Naira only), or such other amount that the CBN may specify from time to time, payable to the Central Bank of Nigeria by electronic transfer;
  • Evidence of promotion or investment of a payment service company;
  • Evidence of payment of capital contribution by each shareholder;
  • Evidence of location of Head Office (rented or owned) for the take-off of the PSHC;
  • Schedule of changes, if any, in the Board, Management, IT infrastructure and significant shareholding since the grant of AIP;
  • Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, telecommunications, etc. to perform PSHC operations and meet CBN and other regulatory requirements;
  • Organisational structure, showing functional units, responsibilities, reporting relationships and grade (status) of heads of departments/units; and
  • Board and staff training programme.

It must be noted that the CBN may, at any time, and without recourse, vary or review any condition of a licence or impose additional conditions. As regards the duration of a PSHC licence, it is granted for an indefinite period of time or such period as the CBN deems necessary and shall not be transferable.

Apart from the above, the PSHC is required to inform the CBN of its readiness to commence activities and such information shall be accompanied with one copy of each of the following:4

  • Shareholders' Register;
  • Share certificate issued to each investor;
  • Enterprise Risk Management Framework (ERMF);
  • Internal Control Policy;
  • Minutes of pre-commencement board meeting;
  • Opening statement of affairs signed by directors and auditors; and
  • Date of Commencement of Activities

After it has commenced its activities, the PSHC shall comply with all relevant guidelines and regulations issued by the CBN and relevant extant laws; maintain adequate accounting system and keep records that capture all information which reflect the financial condition of the PSHC and ensure that it and all its subsidiaries are adequately capitalised at all times.5


There are corporate governance provisions designed to strengthen the governance structure of the PSHC, which include the following:6

  • The board shall include, at least, an individual with requisite experience in the business(es) of the subsidiary payments service companies within the Group.
  • Appointment to the board and management positions shall be in line with the requirements of Assessment Criteria for Approved Persons' Regime for Financial Institutions or any other applicable regulations, issued by the CBN.
  • Regulations on the disqualification of Board and management, applicable to OFIs shall apply to PSHC.


The PSHC Guidelines provides that prior approval of the CBN shall be obtained for any shareholding of 5.0% and above, or any change in ownership which results in change in control of the PSHC. Also, subsidiaries of a PSHC are prohibited from acquiring shares in the PSHC or shares of other subsidiaries of their parent PSHC.

A PSHC shall cease to be one and shall submit its licence to the CBN for cancellation in the following circumstances:

  • Where a PSHC loses control of any of the two payments services subsidiaries - switching and processing company or mobile money operator - in the group, for a period exceeding six (6) consecutive months.
  • Where a PSHC with only two subsidiaries, loses its controlling interest in either of the subsidiaries, for a period exceeding six (6) consecutive months.

In both instances above, subsequent to the cancellation of its licence, the PSHC shall divest wholly and completely and completely from that subsidiary within a period of six (6) months or any other period as may be determined by the CBN, to enable the subsidiary to continue operations as an independent entity.7


It is expressly provided that except with the prior written approval of the CBN, no PSHC's director, shareholder, agent or instrumentality of such an entity or its shareholders shall enter into an agreement or arrangement which results in a change in the control of the PSHC and the transfer of shareholding of 5 per cent and above in the PSHC; or for the:

  • Sale, disposal or transfer howsoever of the whole or any part of the business of the PSHC;
  • Issuance of New shares;
  • Amalgamation or merger or takeover of the PSHC with any other person;
  • Reconstruction of the PSHC; or
  • To employ a management agent or to be managed by or to transfer its business to any such agent.


Generally, the activities of the PSHC are restricted to the holding of equities in financial and technological subsidiaries that facilitate and/or enhance innovative digital financial services. However, the PSHC can also provide broad policy direction, shared services and/or enter into technical or management service contract with any of its subsidiaries, with the prior written approval of the CBN, in respect of the following areas: Human Resources services, Risk Management services, Internal Control services, Compliance services, Information and Communication Technology, Legal services, Facilities (office accommodation including electricity, security, cleaning services in that accommodation); and, any other services as may be approved by the CBN from time to time.8

For shared services, such shall be provided on arm's length basis, and transactions in respect of such services shall require the consent of the Board of Directors of the subsidiary.


A PSHC is prohibited from undertaking the following activities:

  • Establishment, divestment and closure of subsidiaries, without the prior written approval of the CBN.
  • Deriving or receiving income from sources other than as listed herein:
    1. Dividend income from its subsidiaries/associates;
    2. Income from shared services, where applicable;
    3. Interest earned from idle funds invested in government securities or placement with licensed financial institutions;
    4. Patents, royalties and copyrights;
    5. Profit on divestment from subsidiaries/associates; and,
    6. Any other source as may be approved by the CBN

Furthermore, a PSHC is prohibited from interfering in the internal management of its subsidiaries or engaging in any transaction or maintain any business relationship with any of its subsidiaries, except such transaction or business relationship is at arm's length.

By the Guidelines, a PSHC is further prohibited from borrowing from the Nigerian banking system for the purpose of capitalising itself or any of its subsidiaries.9


The Guidelines provides that a PSHC shall have a minimum paid-up capital which shall exceed the sum of the minimum regulatory capital/ total equity of all its subsidiaries, as may be prescribed from time to time by the CBN (where the PSHC owns 100 per cent of the subsidiaries).

Where the PSHC owns less than 100 per cent of the subsidiaries, its minimum paid-up capital shall exceed the summation of its proportionate holding in the subsidiaries. Excess capital in one subsidiary shall not be used to make up a shortfall in another subsidiary. It is the capital of the PSHC that is applied to the subsidiaries.


A PSHC shall not pay dividends on its shares except:

  • All its operational, preliminary and organisational expenses, losses incurred and other capitalised expenses, not represented by tangible assets (excluding goodwill), have been completely written off.
  • Adequate provisions have been made to the satisfaction of the CBN for actual and contingent losses.
  • It has complied with any capital requirements provided in the Guidelines.


A PSHC and all its subsidiaries are under the supervision of the CBN. All PSHCs are required to render returns to the Payments System Management Department of the CBN on a quarterly basis, or in frequency and format, prescribed by the CBN from time to time.

The returns shall include information on the following:

  • Compliance with corporate governance guidelines
  • Whistle blowing
  • Assets and liabilities of the PSHC and its subsidiaries
  • Risk management
  • Internal control
  • Intra-group transactions


The above is a detailed highlights of the CBN Guidelines for the operations of Payments Services Holding Companies and it is intended to ensure a clear demarcation of their duties from those of their subsidiaries.


1. Section 2.1. of the PSHC Guidelines

2. Section 2.2 of the PSHC Guidelines.

3. Section 3.0 of the PSHC Guidelines

4. Section 3.3 of the Guidelines.

5. Section 3.4 of the PSHC Guidelines.

6. Section 4.0 of the PSHC Guidelines.

7. Section 4.1(f) of the PSHC Guidelines.

8. Section 5.0 of the PSHC Guidelines.

9. Section 6.2 of the Guidelines.

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.