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REGULATION OF FINTECH IN NIGERIA: DIFFERENCE BETWEEN MMOs, PSBs AND MFBs (version 2.0)

posted 2 years ago

In our February 3, 2020 article, we had written on the differences between a Mobile Money Operator (MMO) license, a Payment Service Bank (PSB) license and a Microfinance Bank (MFB) license. The article was aimed at supporting Fintechs in determining which of the existing Central Bank of Nigeria (CBN) licenses is compatible with their services or proposed products.

Since our article, the CBN has issued various regulations and policies affecting MMOs, MFBs and PSBs. In view of this, we have updated our table on the different licenses to reflect the regulatory update.

 

MMO

PSB

MFB

Minimum share capital

 

NGN 2 billion

NGN 5 billion

Unit (Tier 1) – NGN 200 million

Unit (Tier 2) – NGN 50 million

State MFB – NGN 1 billion

National MFB – NGN 5 billion

Service Area

No restriction

25% of its operations in Rural Areas

Unit (Tier 1) – operating in urban areas with 5 offices in 5 Local Government Areas (LGAs).

Unit (Tier 2) – operating in rural areas with two branches in 1 LGA.

State – operating in one state.

National – operating in all the states.

Loan

Not permitted

Not permitted

Permitted provided that:
• No single loan will exceed 1% of the
sharecapital of the MFB; and
• subject to 80% Micro loan of the total loan portfolio.*Micro loans are credit facilities not more than NGN 500,000 for Unit
(Tier 1) and NGN 1 million for other categories.

Bank accounts and Wallets

Bank Account-Based

Card Account-Based (Credit, Debit and Pre-paid)

e-Wallet

Account and e-Wallets

Bank accounts

Cards

Limited to card processing

Debit and Pre-paid cards

Debit and Credit cards

Transaction limit

Depending on KYC level

level 1 – NGN 50,000 (balance of NGN 300,000)

level 2 – NGN 200,000 (balance of NGN 500,000)

level 3 – NGN 5,000,000 (unlimited balance)

Depending on KYC level

level 1 –  NGN 50,000 (balance of NGN 300,000)

level 2 – NGN 200,000 (balance of NGN 500,000)

level 3 – NGN 5,000,000 (unlimited balance)

No Limit

Foreign Currency transaction

Can receive and sell foreign exchange from inbound transfer.

Prohibited from remittance.

Can receive and sell foreign exchange from inbound transfer.

Prohibited from remittance.

Prohibited from foreign exchange transactions

Airtime and USSD service 

Permitted (subject to NCC approval)

Permitted (subject to NCC approval)

Permitted (subject to NCC approval)

QR Code Payments

Permitted

Permitted

Permitted

Connection with the Nigeria Inter-bank Settlement System

(NIBSS)

Required

Required

Required

Connection with the
CBN Real Time Gross
Settlement (RTGS)

Required

Not required

Not required

Agent Banking

Permitted

Permitted

Permitted

Who can Operate

Existing Banks and any
company can apply for an MMO license.

Limited to the types of companies
listed below:Banking AgentsTelecommunication companiesRetail chainsPostal Service and Courier CompaniesMMO (converting to PSB)Switching Companies

Financial Technology companies

Financial Holding companies

Any company can apply for an MFB license.

 

If you require clarity or further information on the licenses above, contact Pavestones at [email protected].

 

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