CBN REQUIREMENTS FOR FINTECH & PAYMENT SOLUTION LICENCE IN NIGERIA 2021

The Central Bank of Nigeria (CBN) being the regulatory body saddled with the statutory duty of administering the affairs of the financial activities in Nigeria in fulfilment of its duties published the new requirements to obtain a licence to operate a Financial Technology (Fintech) Company in Nigeria on May 24, 2021. Pursuant to the new regulations, there are generally 6(six) categories of licences, one or more of which a Fintech company can obtain depending on the services such a company intends to undertake. The six Fintech categories and capital requirements are as stated below.

In view of the peculiar nature of services rendered by the Fintech companies, the sector is strictly regulated and the requirements for obtaining a CBN licence is quite tedious. By and large, general information and documents required to obtain a Fintech licence from the CBN are as follows:

1. Incorporation documents
2. Memorandum and Articles of association; the object clause must be specifically drafted to include only relevant payments system activities permitted by the CBN.
3. Tax Clearance Certificate for three (3) years of the company (if applicable) and Taxpayer Identification Number (TIN) of company
4. The company’s profile; detailing the current type of business operation, products and services Classified as Confidential
5. Structure of holding company or parent company (if applicable)
6. Details of ownership: private/public; ultimate parent; any significant changes in ownership in the last two years
7. Total number of employees
8. Organogram
9. A functional physical address, contact e-mail, and telephone numbers
10. Board Structure – showing at a minimum the Chairman, CEO/MD, and at least, one (1) Independent NonExecutive Director and other Director(s)
11. Bank Verification Number (BVN), Curricula Vitae (CVs), proof of government-issued identity (National Identification Number (NIN), International Passport, Driver’s Licence, or Voter’s Card) of Board and top management team.
12. Details of the current line of business (if applicable)
13. Business Plan, to include:
    1. Nature of the business
    2. Features of the scheme
    3. Security features that will be put in place
    4. 5-years financial projections
    5. Proposed schedule of charges
    6. Profit-sharing arrangement
    7. Diagrammatic illustration of transaction flows
    8. Understanding of the nature of the POS business and support requirements
    9. Terminal deployment and connectivity strategy
    10. POS support strategy (on-site and off-site) and strategy to ensure failures are remotely detected and fixed within 72 hours
    11. Transaction fees and other charges to be borne by customers
    12. Strategy for ensuring 99.9% uptime for terminals
    13. Training and merchant relationship management strategy
    14. Customer care and issue resolution strategy
    15. A project work plan that demonstrates readiness/ability to commence work.
    16. Partnerships & Alliances – scope, duration, and other pertinent details
    17. Competitive advantage/value proposition
    18. Planned coverage area s. Experience with this activity or something similar in the past.
14. Information technology policy of the company including Privacy Policy, Information Ownership/Disclosure/Loss Policy, Backup and Restore Policy, Network Security Policy, Encryption Policy, Confidential Data Policy, Password Policy, Third Party Connection Policy, Incidence Response Policy, Physical Security Policy
15. Enterprise Risk Management Framework Classified as Confidential
16. Dispute Resolution Framework
17. Contingency and Disaster Recovery Plan (Business Continuity Plan)
18. Duly executed agreements (drafts, as applicable) with the Technical partners, Participating banks, Merchants, Telcos, etc.
19. Project Deployment Plan/Methodology
20. A document that shall outline the strategy of the shared agent network including current and potential engagements, geographical spread and benefits to be derived (applicable to switching and processing licence only)
21. Qualifying criteria for engaging agents e.g. Outreach, Competence, Integrity etc. (applicable to super agent and PSS licence only)
22. Draft Service Level Agreements (SLAs) with sub-agents and Financial Institution (FI) Agent Banking Contract (applicable to switching and processing, PSS and super agent licence only)
23. Risk management, internal control, operational procedures and any other policy and procedures relevant to the management of an agent banking arrangement (applicable to switching and processing, PSS and super agent licence)
24. Procedures for KYC and AML/CFT compliance (applicable to switching and processing, PSS and super agent licence)
25. Fraud detection plan and standard of care (applicable to switching and processing and PSS licence only)
26. Consumer Protection Policy and Procedure Board Approval (applicable to switching and processing, PSS and PSSP licence only)
27. Certifications: Classified as Confidential (applicable to all except mobile money and super agent licence):
    1. Payment Card Industry Data Security Standard (PCIDSS) Certification (if applicable)
    2. Payment Application Data Security Standard (PADSS) Certification or Compliance with CBN IT Standards for Solution Development (if applicable)
    3. Payment Terminal Service Aggregator (PTSA) of Payment Terminal Application Certification
    4. Other relevant certifications
28. Business Plan for the PTSP and should cover (at a minimum) understanding of the nature of the POS business and support requirements, terminal deployment and connectivity strategy, POS support strategy (on-site and off-site) and strategy to ensure failures are remotely detected and fixed within 72 hours, features of the scheme, securities features that will be put in place, transaction and other charges that will be borne by customers, strategy for ensuring 99.9% uptime for terminals, training and merchant relationship management strategy, customer care and issue resolution strategy, strategy to obtain certifications from switches and other relevant bodies, Project work plan that demonstrates readiness/ability to commence work, etc.( applicable to PSS and PTSP licence only)
29. A document that shall outline the strategy of the shared agent network including current and potential engagements, geographical spread and benefits to be derived(applicable to PSS only).
30. Must have a minimum of 50 agents (applicable to PSS and super agent only).
31. PTSA’s of Payment Terminal Application Certification (applicable to super agent only)

Conclusively, a company applying for a licence is to make payment of a non-refundable application fee of N100,000.00 payable to the CBN as well as licensing fee of N1,000,000.00 to be paid before the issuance of the final licence, if successful. The Approval-in-Principle once granted is valid for 6 (six) months after which the licence will be granted.

By Business Law Team at Resolution Law Firm