CBN to review fintech licensing framework

The Central Bank of Nigeria plans to review its licensing framework and develop a new regulatory and compliance framework for the payment service sector.

The CBN Governor, Olayemi Cardoso, revealed this at the Chartered Institute of Bankers of Nigeria’s annual dinner in Lagos, held recently.

He noted that while technology would continue to play a critical role in delivering financial services and enhancing financial inclusion, the CBN was concerned about recent developments in the space.

He said, “Technology will continue to play a critical role in delivering financial services and enhancing financial inclusion. However, recent developments in the payment services landscape have raised concerns regarding the use of technology and the existing licensing and regulatory framework.”

Cardoso noted that the apex bank had observed that “some licensees are operating outside the approved activities, breaching the boundaries set for them. Any intentional or unintended non-compliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activities they undertake”.

That he said called for a comprehensive review of the licensing framework of the space.

He added, “Concurrently, as we conduct a comprehensive review of the licensing framework for payment services, we will engage in extensive consultations to develop a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.”

Currently, payment service providers can operate with a Payment Service Provider License, Payment Terminal Service Provider License, Mobile Money Operator License, Switching and Processing License, or a Payment Solution Service Provider License.

In a circular dated December 9, 2020, the apex bank approved new licence categorisations for the payments system.

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It streamlined activities permissible under payments system licensing to switching and processing, mobile money operations, payment solution services, and regulatory sandbox.

Cardoso further highlighted that fintechs had a role to play in helping Nigeria achieve its GDP target of $1tn and improving its capital inflows.

He declared, “Further to the projected growth target, sectors including agri-processing, oil & gas, manufacturing, solid minerals, fintech and information technology, real estate construction and infrastructure, among others are expected to attract significant capital investments.

“As these sectors expand, so will opportunities for incumbent players and new entrants alike, which are willing to make calculated bets as economic spaces open from the expansion of the economy.”