Guidelines For Licensing and Regulation of Payment Service Banks in Nigeria [Exposure Draft]

The Central Bank of Nigeria (CBN) is proposing the establishment of Payment Service Banks and has issued the Exposure Draft Guidelines For Licensing and Regulation of Payment Service Banks in Nigeria for comment and observation. (Issued on the CBN website at www.cbn.gov.ng)

'In an effort to promote financial inclusion and enhance access to financial services for low income earners and unbanked segments of the society through leveraging on technology, the Central Bank of Nigeria (CBN) is proposing the establishment of Payment Service Banks. This is in furtherance of its mandate to promoting a sound financial system in Nigeria as well as being innovative in deepening the financial services sector.'

Relevant portions of the Payment Service Banks Guidelines include: 

  • Objectives and Structures of Payment Services Banks
  • Permissible Activities and Non-Permissible Activities
  • Eligible Promoters
  • Licensing Requirements
  • Corporate Governance
  • Business Conduct (Fair Competition)
  • Prudential Regulation of Payment Service Banks
  • Supervision:
  • Know Your Customer (KYC) Requirement
  • Risk Management
  • Revocation of License

The Central Bank of Nigeria defined its objectives as follows:

The key objective of setting up Payment Service Banks is to enhance financial inclusion in rural areas by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other entities through high-volume low-value transactions in a secured technology-driven environment.

The draft guidelines allow for Payment Service Banks to perform the following activities:

  • Maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme;
  • Carry out payments and remittance (including inbound cross-border personal remittances) services through various channels within Nigeria;
  • Issue debit and pre-paid cards;
  • Operate electronic purse;
  • Invest in FGN and CBN securities; and
  • Carry out such other activities as may be prescribed by the CBN from time to time.

Eligible entities include the following:

  • Banking Agents
  • Telecommunications companies (Telcos), through subsidiaries
  • Retail chains (Supermarkets)
  • Mobile Money Operators (MMOs that desire to convert to Payment Service Banks shall comply with the requirement of this Guideline)
  • Entities approved from time to time by the CBN

Document Details

Document Type: 
Doument Author (Entity): 
Authoring Country: 
Originating Country or Trade Block: 
Year of Document: 
2018
Date of Document: 
Friday, October 5, 2018

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