Payments System: The New CBN Licensing Framework

The payments system cluster is perhaps one of the more sophisticated layers of the Fintech ecosystem in Nigeria, and is certainly one of the most active amongst users and most attractive to investors. From switching and payment gateway companies to mobile wallet operators and beyond, this segment of the market has multiple tentacles, all of which represent a critical pillar of the entire Fintech ecosystem.

On the 9th of December 2020, the Central Bank of Nigeria (‘CBN’) issued a circular (the ‘PSP Circular’) setting out a new licensing framework for payment service providers. Amongst other things, the PSP Circular sets out permissible activities that payments system companies can engage in, minimum capital requirements depending on the license category and generic regulatory requirements that apply to the entire payments system.