3 October 2023

Requirements For Payment Service Provider License In Nigeria

In the dynamic landscape of financial services, the role of Payment Service Providers (PSPs) has become increasingly crucial. As Nigeria positions itself as a hub for financial innovation...
Nigeria Finance and Banking
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In the dynamic landscape of financial services, the role of Payment Service Providers (PSPs) has become increasingly crucial. As Nigeria positions itself as a hub for financial innovation and inclusion in Africa, obtaining a Payment Service Provider license is a strategic move for entities seeking to participate in the burgeoning fintech sector. This summary guide explores the intricate requirements and processes involved in securing a Payment Service Provider license in Nigeria.

Understanding the Regulatory Framework for Payment Service Providers

The regulatory framework for Payment Service Providers in Nigeria is primarily overseen by the Central Bank of Nigeria (CBN). The CBN, as the apex financial regulatory authority, is responsible for ensuring the stability and integrity of the financial system. The guidelines for licensing and operations of Payment Service Providers are outlined in the CBN Guidelines on Operations of Electronic Payment Channels in Nigeria.


Before delving into the specific requirements, it's essential to understand the different categories of Payment Service Provider licenses in Nigeria:

  1. Payment Solution Service Provider (PSSP): PSSPs offer technology solutions and infrastructure for electronic payment transactions.
  2. Payment Terminal Service Provider (PTSP): This category includes entities that provide and manage point-of-sale (POS) terminals.
  3. Payment Solution Services: this category also involves companies providing technology services to facilitate payment services online.
  4. Switching & Processing (S&P): Switching companies facilitate the routing of electronic payment transactions between acquirers and issuers.
  5. Mobile Money Operator (MMO): This category covers entities that provide mobile-based financial services, including transfers, payments, and other financial transactions. They are otherwise called digital banks.


The key general requirements for the processing of payment service provider licenses in Nigeria are as follows -

  • Incorporation and Legal Structure: Applicant must be duly incorporated as a company in Nigeria. The legal structure and corporate governance must align with the requirements stipulated by the CBN. The objectives and authorized share capital of the company must fit into the exact category of license to be applied for. Meeting the share capital thresholds is crucial for demonstrating the financial stability and viability of the applicant.
  • Fit and Proper Criteria: The directors, shareholders, and key management personnel must meet the "fit and proper" criteria set by the CBN. This involves assessing their integrity, competence, and financial soundness. They may be interviewed by relevant security agencies for a background check. A payment service provider company is expected to maintain at least five directors.
  • Business Plan: Applicants are required to submit a comprehensive business plan that outlines their operations, target market, technology infrastructure, risk management processes, and growth strategy. This plan should align with the objectives of promoting financial inclusion and innovation.
  • Technology Infrastructure: Payment Service Providers must demonstrate a robust and secure technology infrastructure that complies with international standards. This includes secure data storage, encryption protocols, and measures to prevent fraud and cyber threats.
  • Operational Guidelines: Applicants must adhere to the operational guidelines outlined by the CBN, covering areas such as customer service, dispute resolution, anti-money laundering (AML), and combating the financing of terrorism (CFT).
  • Risk Management Framework: Establishing a comprehensive risk management framework is a critical requirement. This involves identifying, assessing, and mitigating risks associated with electronic payment services.
  • Compliance with Regulatory Requirements: Payment Service Providers must ensure compliance with all relevant regulatory requirements, including data protection laws, consumer protection regulations, and any other guidelines issued by the CBN.
  • Security Standards: Compliance with Payment Card Industry Data Security Standard (PCI DSS) and other security standards is imperative. This ensures the protection of sensitive financial and personal information.
  • Agent Network: For certain categories of Payment Service Providers, such as Mobile Money Operators, the establishment and management of an effective agent network are essential. Agents play a key role in extending financial services to underserved areas.
  • Approval from Relevant Regulatory Authorities: Depending on the nature of the services offered, applicants may need approvals from other regulatory bodies, such as the Nigerian Communications Commission (NCC) for mobile-based services.
  • Insurance Coverage: Payment Service Providers are required to obtain adequate insurance coverage to protect against operational risks and liabilities.


  1. Certificate of Incorporation of the company
  2. Memorandum & Articles of Association (Note: the object clause(s) must be RESTRICTED to relevant payments system activities permitted by the Bank)
  3. Form CAC 2A (now changed to Application Status by CAC)
  4. Form CAC 7A (now changed to Application Status by CAC)
  5. Tax Clearance Certificate for three (3) years of the company (if applicable) and Taxpayer Identification Number (TIN) of company
  6. The company's profile; detailing current type of business operation, products and services
  7. 7. Structure of holding company or parent company (if applicable)
  8. Details of ownership: private/public; ultimate parent; any significant changes in ownership in the last two years
  9. Total number of employees
  10. Organogram
  11. Functional physical address, contact e -mails from company's domain and telephone numbers
  12. Board Structure – showing at a minimum Chairman, CEO/MD, and at least, one (1) Independent Non -Executive Director and other Director(s)
  13. Bank Verification Number (BVN), Curricula Vitae (CVs ), proof of government issued identity (National Identification Number (NIN), International Passport, Driver's Licence, Voter's Card) of Board and top management team.
  14. Details of current line of business (if applicable )
  15. Business Plan, to include:

    • Nature of the business
    • Features of the scheme
    • Securit y features that will be put in place
    • 5 years financial projections
    • Proposed schedule of charges
    • Profit sharing arrangement
    • Diagrammatic illustration of transaction flows
    • Understanding of the nature of the POS business and support requirements
    • Terminal deployment and connectivity strategy
    • POS support strategy (on -site and offsite) and strategy to ensure failures are remotely detected and fixed within 72 hours
    • Transaction fees and other charges to be borne by customers
    • Strategy for ensuring 99.9% uptime for terminals
    • Training and merchant relationship management strategy
    • Customer care and issue resolution strategy
    • Project work plan that demonstrates readiness/ability to commence work.
    • Partnerships & Alliances - scope, duration, and other pertinent details
    • Competitive advantage/value proposition
    • Planned coverage area
    • Experience with this activity or something similar in the past
  1. Information Technology policy of the company including:

    • Privacy Policy
    • Information Ownership/Disclosure/Loss Policy
    • Backup and Restore Policy
    • Network Security Policy
    • Encryption Policy
    • Confidential Data Policy
    • Password Policy
    • Third Party Connection Policy
    • Incidence Response Policy
    • Physical Security Policy
  1. Enterprise Risk Management Framework
  2. Dispute Resolution Framework
  3. Contingency and Disaster Recovery Plan (Business Continuity Plan)
  4. Duly executed agreements (drafts, as applicable) with the following:

    • Technical partners
    • Participating banks
    • Merchants d. Telcos
    • Any other relevant party
  1. Project Deployment Methodology
  2. A document that shall outline the strategy of the shared agent network including current and potential engagements, geographical spread and benefits to be derived
  3. Qualifying criteria for engaging agents e.g.

    • Outreach b. Competence
    • Integrity
    • Others
  1. Draft Service Level Agreements (SLAs) with sub-agents and Financial Institution (FI) Agent Banking Contract
  2. Risk management, internal control, operational procedures and any other policy and procedures relevant to the management of an agent banking arrangement
  3. Procedures for KYC and AML/CFT compliance
  4. Fraud detection plan and standard of care
  5. Consumer Protection Policy and Procedure Board Approval
  6. Certifications:

    • Payment Card Industry Data Security Standard (PCIDSS) Certification (if applicable)
    • Payment Application Data Security Standard (PADSS) Certification or Compliance with CBN IT Standards for Solution Development (if applicable)
    • Payment Terminal Service Aggregator (PTSA) of Payment Terminal Application Certification
    • Other relevant certifications


The cost of setting up a payment service provider company depends on the category of license. The major financial obligation is the shareholders' fund, which must be deposited with the CBN during the pendency of the application. Once the application is approved, the funds are returned to the owner with any accruable interest. A PSSP or PTSP category company must deposit NGN100 Million with the CBN while the MMO and Switching Companies are mandated to deposit a minimum of NGN2 Billion each with the CBN before the commencement of the application process.

Apart from the shareholder funds that must be deposited, the applicant must register a company with an authorized share capital not less than the required shareholder funds for the applicable category with CAC. The applicant must also pay the application fee and license fee to the CBN. The licensing for all the categories is still NGN1,0000,000 as of 2023. All these financial obligations are without the service fee an applicant may incur in using any professional services during the application process.


  • Pre-Application Engagement: Prospective applicants are encouraged to engage with the CBN or experienced consultant in a pre-application meeting. This provides an opportunity to seek clarification on requirements and address any concerns.
  • Submission of Application: The formal application, accompanied by all necessary documents, is submitted to the CBN. The completeness and accuracy of the application are crucial for a smooth evaluation process.
  • Payment of Shareholder Funds: The shareholders' funds for the applicable category must be immediately deposited to the CBN after the application is submitted. The CBN will not treat the application without the payment of the shareholders' funds first.
  • Due Diligence and Background Checks: The CBN conducts due diligence and background checks on the directors, shareholders, and key management personnel to ensure they meet the fit and proper criteria.
  • On-Site Inspection: The CBN may conduct an on-site inspection of the applicant's premises to assess the physical infrastructure, security measures, and overall operational readiness.
  • Review and Approval: The CBN reviews the application, taking into consideration all relevant factors, including the applicant's financial stability, compliance with guidelines, and adherence to technology standards. If satisfied, the CBN grants the Payment Service Provider license.
  • Post-Licensing Obligations: License holders are required to comply with ongoing reporting requirements, risk management practices, and any additional guidelines issued by the CBN. Regular audits and assessments must be conducted.

In conclusion, obtaining a Payment Service Provider license in Nigeria is a multifaceted process that demands meticulous preparation, compliance with regulatory standards, and a commitment to fostering financial inclusion. As technology continues to reshape the financial landscape, the role of Payment Service Providers becomes increasingly vital in facilitating secure and efficient electronic payment transactions. By navigating the complex requirements outlined by the CBN, entities can also contribute to the evolution of Nigeria's financial ecosystem.

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.

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