CBN Fintech license should be the first thing you consider when planning to start a fintech company in Nigeria. You may have the money to invest and have the technical skill, but without the necessary license you are not permitted to operate in Nigeria. So the question is what does it take to obtain a Fintech license? Which agency is in charge of issuing Fintech license? What is the cost of such Fintech license? Generally Central Bank of Nigeria (CBN) is the body with the responsibility of regulating and issuing license for all financial service providers in the country and that includes issuing fintech license. So if you want to start a fintech company in Nigeria, you should be prepared to get a license from CBN.
Why CBN License for Fintech Companies in Nigeria?
Early fintech companies in Nigeria didn’t necessarily need a license from either CBN or any other regulatory body for that matter to operate. However the situation changed in 2018. Central Bank of Nigeria (CBN) introduced a regime that requires a license to operate a Fintech company. It was called Payment Systems Providers (PSP). The licensing regime is meant to guide against fraud and cyber risks. So every intending fintech company is expected to obtain this license from CBN before starting operation.
Categories of CBN PSP License for Fintechs
CBN categories PSP into three groups, and they are as follow:.
This license is for fintech companies that deploy Point of Sale (POS) or terminal services. The license is also required for fintechs that are into payment processing gateway and all such solutions. The shareholder requirement for this license is ₦100 million. And the license fee costs between ₦100,000 – ₦500,000.
This license is the requirement for fintechs that want to create wallet. It is also for those that wish to serve as agent recruiters and e-money issuers. Shareholders fund is a minimum of ₦3 billion, while the licence fee is between ₦500,000 – ₦1,000,000.
This license is the ultimate, and it is for fintechs that want to offer payment gateway platforms with switching services. Minimum shareholder fund is ₦5 billion, and the license fee is between ₦1 – ₦2 million per year for 3 years.
How to Operate Without a CBN FinTech License
As you can see from above it is a lot of investment to get a fintech license from CBN. So without such capital you may not be able to start even if you have the necessary skill. So it is highly recommended that before you think of starting your own fintech company you should have a plan of how to raise the money to secure the license from CBN. And remember that the exact license you are applying for depends on the focus niche and the services you plan to offer. And that will also determine the cost.
However, in a situation where the money is not just there there is a way out. Yes, you can still operate without having your own fintech license direct from CBN.
In a situation like that you need to seek for partnership. Look for another platform that already have the license, discuss with them for a chance to partner them. Once you are able to secure that your developers can get down to work. You work knowing that you are protected by the license of your partners.
As you already know Fintech is one of the industries of choice today. It is a good opportunity for anyone. But you also need the resources to start. And a good measure of the resources you need will go into securing a CBN license.
My advice is that you have a good business plan that can help secure funding for you before you start. And in a situation where you can’t raise the money look for someone to partner rather than allow your idea to die.