The Central Bank of Nigeria (CBN) gave an official node to telecommunication operators’ push to offer mobile money services in Nigeria as the industry regulator issued final approval to three firms to operate as Payment Service Banks (PSBs) on Friday.
The three firms are Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB. The apex had issued Approval-in-Principle (AIP) to the three subsidiaries in September 2019.
“Three Payment Service Banks (PSB) have been granted final approval to operate as PSBs following compliance with licensing requirements: a. Hope PSB b. Moneymaster PSB c. 9 PSB,” the CBN said in a tweet.
A PSB license allows the companies to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet.
For a company to obtain the licence to operate as a payment service bank the CBN said it would have to provide the financial requirement of N5.35 billion.
“Minimum capital N5,000,000,000.00, Non-refundable application Fee N500,000.00, Non-Refundable Licensing Fee N2,000,000.00 and change of name fee N1,000,000.00,” as complied from the new circular that has the guideline issued by the central bank for licencing and regulation of Payment Service bank.
According to the circular, the structure of the banks include the fact that they shall among other requirements operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25% financial service touchpoints in such rural areas as defined by the CBN from time to time
“Enter into direct partnership with card scheme operators. Such cards shall not be eligible for foreign currency transactions; deploy ATMs in some of these areas; deploy Point of Sale devices,” the apex bank stated.
Payment Service Banks according to the central bank shall not grant any form of loans, advances and guarantees (directly or indirectly) or accept foreign currency deposits; deal in the foreign exchange market except as prescribed by the CBN.
They shall also not participate in insurance underwriting; undertake any other transaction which is not prescribed by this Guidelines, and shall not accept any closed scheme electronic value (e.g. airtime) as a form deposit or payment.
The apex bank said the license of a PSB may be revoked by the regulator subject to any of the following conditions: Failure to comply with any of the provisions of the PSB Guidelines or other circulars and Guidelines issued by the CBN from time to time, failure to comply with the provisions of the BOFIA, and Voluntary liquidation by a PSB with the prior written approval of the CBN.
Before now, only banks and licensed financial institutions were allowed to provide these services. Although telecom operators and other fintech companies indicated interests to operate in the market, the CBN policy would not allow them. The regulator eventually shifted because of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access.
The apex bank has a target to ensure that 80 percent of the country’s adult population is financially included in the financial cycle by the year 2020. The CBN had in a circular on July 2018, lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy. Not only was the country not meeting its targets, but it was also declining in growth. For instance, while Nigeria achieved 60.3 percent in 2012, it declined to 58.4 percent in 2016 against a target of 69.5 percent translating to financial exclusion of about 41.6 percent.
The World Bank Global Findex Report 2017 estimates that of the 1.7 billion adults who are unbanked and financially excluded worldwide out of the estimated world adult population of billion, Nigeria has 3.4 percent even though its population is 2.6 percent of the world population.
In a bid to grow the number of financially included people, the CBN released an exposure draft in October 2018 in which it proposed Payment Service Banks aimed at deepening financial inclusion in Nigeria.
At least 30 business names applied for registration as PSBs as of December 2018, according to data from Corporate Affairs Commission (CAC) which BusinessDay saw.
Among the list of applicants were four of the telecommunications companies that operate in Nigeria, MTN, Globacom, Barti Airtel and 9Mobile. Other companies include Probity Payment Service Banks; IFIS; Hope PSB; Goals; A-Tel; among others.