Regulation of Fintech in Nigeria: difference between MMOs, PSBs and MFBs

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.

 

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  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.

 

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.

 

If you require clarity or further information on the licenses above, contact Pavestones at info@pavestoneslegal.com.

 

 

 

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Read the original publication at Pavestones

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