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posted 2 years ago


In our newsletter titled “Regulatory Requirement for Fintech in Nigeria; CBN Licenses”, we analyzed the Central Bank of Nigeria (“CBN”) categorization of the Fintech licenses into four categories based on CBN circular dated December 9, 2020 (the “Circular”). In the Circular, the CBN indicated that operating more than one license category must be done through a holding company. The CBN expects that the holding structure would help to prevent commingling of activities, facilitate management of risks and enable the CBN exercise adequate regulatory oversight on all the companies operating within the Group.

Sequel to the Circular, the CBN on August 3, 2021, issued the Guidelines for licensing and regulation of payments Service Holding Companies in Nigeria (the “Guidelines”). In this article, we analyze the provisions of the Guidelines.

  1. Which licensing categories are affected?

Companies wishing to operate the licenses in the following categories under one umbrella, are required to set up a Payment Service Holding Company (“PSHC”) which will be the holding company of the various subsidiaries holding the fintech licenses (“Subsidiaries”):

i.Mobile Money Operations;

ii.Switching and Processing; and

iii.Payment Solutions Services.

  1. How is a PSHC established?

A PSHC shall be a company registered under the Corporate Affairs Commission, and licensed by the CBN.

  1. What is the role of the PSHC?

The PSHC will be a non-operating company and will hold equity in the Subsidiaries. The PSHC shall have capital-raising capabilities to support its Subsidiaries. The PSHC shall, however, not be involved in the day-to-day management and operations of the Subsidiaries.

  1. What is the minimum paid up capital of the PSHC?

Where the PSHC wholly owns the Subsidiaries, the minimum paid-up capital of the PSHC must exceed the total of the required minimum capital of all its Subsidiaries. Where the PSHC owns less than 100% of the Subsidiaries, its minimum paid-up capital must exceed the total of its shareholding in the Subsidiaries.

  1. How should the PSHC be structured?

The PSHC should have at least two Subsidiaries which include a Mobile Money Operator (MMO) and a Switching company. Subject to the approval of the CBN, the PSHC can acquire controlling interest (51% shares) in any financial or technology company.

  1. What are the permissible activities?

In addition to holding equities in the Subsidiaries, PSHC may provide board policy direction, shared services or enter into technical or management service contract with any of its Subsidiaries.

  1. What are the non-permissible activities?

PSHC are not permitted to establish, transfer or close any Subsidiary without the consent of the CBN. They are also not permitted to receive income from sources except from dividend income; income from shared services, patents, copyrights and royalties; profits from divestment from Subsidiaries; interest from investment of funds in government securities or placement with licensed financial institutions; or any other source approved by the CBN.

  1. How to apply for a PSHC license?

The license can be obtained by applying to the CBN with the following supporting documents:

i.Evidence of minimum paid up capital;

ii.Detailed business plan;

iii.Draft of the memorandum and articles of association; and

iv.And other required documents;

upon which, an approval in principles will be obtained. Within 6 months of the issuance of the approval in principle, an application is to be made to the CBN for the issuance of the final license.


The new PSHC will provides a tidier way for fintech companies to utilize several fintech license under one umbrella. It is important to note that the Guidelines and the PSHC licensing regime is relatively novel. Therefore, the effectiveness of the PSHC structure in the fintech industry can only be determined with time.



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