The CBN recently introduced open banking, a system that permits financial service providers, including FinTechs, to access customers’ data held by traditional banks, upon obtaining the customers’ consent. While this is to take effect from August 2025, the open banking system would allow FinTechs better service their customer base. This system would foster better connections between traditional banks and FinTechs. Additionally, the CBN has announced its Payments Vision 2025, a framework for the widespread adoption of electronic payment methods and the reduction of cash payments. It is implied that traditional banks and non-traditional financial service providers would be at the forefront of this policy.
Legal affairs
Obligations and requirements to provide payment services or ancillary services described above
First, a FinTech company interested in providing payment services in Nigeria is required to register as a legal entity with the Corporate Affairs Commission (the “CAC”) to commence business. The CBN imposes minimum share capital requirements for FinTech companies, depending on the company’s licence categorization. The CBN has categorized the licensing framework for payment service providers into the following broad categories: (a) switching and processing; (b) mobile money operations and (c) payment solution services. Licenses under the payment solution services are further divided into (i) Super-Agent (ii) Payment Terminal Service Provider (PTSP) and (iii) Payment Solutions Service Provider (PSSP) licenses. Depending on the form of payment services and subject to certain restrictions, a FinTech can either obtain one or a combination of these licenses.
The requirements for obtaining any of these licenses vary. They include minimum capital, application fee and documentary requirements. Apart from CAC incorporation documents, the FinTech company is required to provide tax clearance certificate, company’s profile, details of ownership, total number of employees, business plan, organogram, information technology policy of the company amongst others.
Where the company has foreign participation, it must obtain a business permit and register with the Nigeria Investment Promotion Commission. Where the foreign company intends to transfer and acquire technology, the contract/agreement embodying such a transfer must be registered with the National Office of Technology Acquisition and Promotion (the “NOTAP”).
Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area
FinTechs are also required to ensure that the data provided by their users and stakeholders are protected and secured in line with the applicable data protection statutes in Nigeria. The Constitution of the Federal Republic of Nigeria, 1999 (as amended), CBN Cyber-based Security Framework and Guidelines for Deposit Banks and Payment Service Providers 2018, Cybercrime (Prohibition, Prevention, Etc.) Act 2015 (as amended), and the Nigeria Data Protection Act, 2023 are some of the data protection laws which FinTech Companies are required to comply with in Nigeria.