By Charles Abuede
- Says only MMOs are permitted to hold customer funds
- New framework will promote credible and strong payment system in Nigeria
The Central Bank of Nigeria (CBN) has approved new licence categoriaations for the payments system which permits companies operating as holding company structures to combine transactional activities under the switching and mobile money operations (MMO) categories, while their subsidiaries become clearly defined to prevent co-mingling.
In a circular released on Thursday and signed by Musa Jimoh, the director of the payment system management department of the bank, the apex bank said that the new directive is in line with its commitment to promote a strong and credible payment system in Nigeria.
In the circular, payment system licencing has been streamlined according to the permissible activities of switching and processing, MMOs, payment solution services and regulatory sandbox.
The new categorisation allows only the mobile money operators (MMOs) to hold customers’ funds, while companies with a licence within any of the other categories are not permitted to perform the function of holding customers fund.
Also, payment system companies in the PSS category may hold any of the payment solution service provider (PSSP), payment transfer service provider (PTSP) and licence of super-agents or probably the combination of the three. However, the apex bank has reiterated that all licenced payment service providers, either holding or seeking any of the CBN issued licences, are required to collect a no-objection from the payment system management department.
Meanwhile, the collaboration between licenced payment companies, banks, and other financial institutions in respect of products and services is subject to prior approval of the central bank, while the object clauses found in the memorandum and articles of association of payment services providers shall be available but limited to the permissible activities under their licencing authorisations
The CBN further stated that the new licensing request is inclusive of those with approval in principle and that they are to comply with the new requirements immediately, while the exiting licenced payment firms are to comply with the new requirements where applicable until June 2021.
However, due to the significant evolution and innovation in the payment system market in Nigeria, the new licencing framework provides the clarity for all stakeholders (new and old), the CBN said while stating that it will continue to monitor developments in the system and apply guidance as appropriate.