Fintech founders seeking to launch payment businesses in Nigeria must choose the appropriate Central Bank of Nigeria (CBN) licence before commencing regulated operations, with minimum capital requirements ranging from ₦100 million for some payment service categories to ₦2 billion for mobile money operators and switching companies.
The choice determines the services a company can offer, its regulatory obligations and the financial resources it must commit to obtaining approval. A business designed to process online payments, for instance, faces different licensing requirements from one that operates digital wallets or builds infrastructure for transactions between financial institutions.
The CBN recognises several payment service categories rather than a universal fintech licence. Brandspur Banking News Desk found that the regulator’s published requirements distinguish between Payment Solution Service Providers (PSSPs), Mobile Money Operators (MMOs), and Switching and Processing companies, among other categories.
For founders, understanding these differences before approaching investors or developing a product can help prevent costly changes to their business models. It also provides a clearer picture of the capital, documentation and regulatory approval required to bring a payment service to market.
A PSSP licence is generally relevant to businesses providing payment technology and infrastructure, including payment gateways and related merchant services. The CBN’s published framework places the PSSP category within its broader Payment Solution Services classification. Founders must ensure that the activities they intend to undertake fall within the authorisation granted to their company.
The MMO category is designed for operators providing mobile money services, including electronic wallets and associated payment services. Companies in this category must satisfy the regulator’s capital, governance, technology and operational requirements before receiving approval to operate.
Switching and Processing companies occupy a different part of the payments ecosystem. They provide infrastructure for routing and processing electronic transactions between participating institutions and other payment system participants. Their authorisation requirements reflect the technical and operational responsibilities associated with this role.
Under the CBN’s published licensing requirements, the three categories have different capital thresholds. PSSPs fall under the Payment Solution Services framework, which specifies a minimum shareholders’ fund of ₦250 million for the combined PSS category. The document also provides for a refundable escrow deposit of ₦100 million for a PSSP application. MMOs and Switching and Processing companies each face a ₦2 billion minimum shareholders’ fund requirement and a separate refundable escrow deposit of ₦2 billion.
These figures should not be treated as interchangeable costs. The capital requirement concerns the company’s financial position, while the escrow is a separate deposit made under the regulator’s requirements. Founders should confirm the current applicable rules and payment instructions with the CBN before transferring funds.
The application process begins with registering a company with the Corporate Affairs Commission (CAC). Its memorandum and articles of association must contain business objectives appropriate to the payment activities for which authorisation is being sought.
Applicants must then prepare the required corporate records, including incorporation documents, share-allotment information, directors’ particulars, tax documentation where applicable, ownership details and profiles of the company’s board and senior management.
The CBN’s published requirements also call for a detailed business plan. This should explain the proposed service, transaction flows, security arrangements, pricing, financial projections, technology policies, risk management, dispute resolution and business continuity arrangements. Depending on the licence category, applicants may also need to provide relevant agreements with banks, technical partners, merchants and other participants.
Once the documentation and applicable fees have been assembled, the company submits its application to the CBN’s Payments System Management Department. The published framework provides for an Approval-in-Principle (AIP) stage, followed by the process required to obtain the final operating licence.
The CBN’s service charter lists a target of 60 working days for issuing an AIP and 20 working days for issuing an operating licence to qualified payment service providers. These are stated service targets, not a guarantee that every application will be completed within that period. Incomplete submissions, outstanding requirements and other regulatory considerations may affect the overall process.
Founders should also distinguish between obtaining regulatory approval and establishing a company through the CAC. Incorporation alone does not authorise a business to undertake regulated payment activities.
For startups that do not yet have the resources to pursue a standalone licence, partnering with an appropriately licensed bank or payment provider may be an alternative, provided the arrangement complies with applicable CBN rules. Such a partnership does not automatically confer the partner’s licence on the startup.
The CBN maintains a public register of payment service providers, allowing businesses to check authorised operators and identify the categories under which they are licensed. Founders can consult the register and the regulator’s licensing documents before committing funds or finalising their product design.
