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. |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.