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Wednesday, September 28, 2022

CBN Grants Approval in Principle for Payment Service Bank Licenses to MTN, Airtel

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The Central Bank of Nigeria (CBN) has granted approval in principle for payment service bank licenses to the two major telecommunications firms in Nigeria, MTN Nigeria and Airtel Africa.

MTN Nigeria in a statement said it received it Approval in Principle (AIP) on November 4, 2021 from the CBN for a license application for the proposed MoMo Payment Service Bank Limited.

This is the first step in the process towards a final approval, subject to the fulfilment of certain conditions as stipulated by the CBN.

“The decision to issue a final approval is firmly within the regulatory purview of the CBN and we respect their right and judgement in that regard,” MTN said.

“MTN Nigeria affirms its commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and continues to explore means whereby it can contribute to its fulfilment. While we look forward to the eventual grant of a final PSB license, we will continue to communicate material information in accordance with regulatory obligations and guidelines.”

Airtel Africa, a provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, on its part announced that its subsidiary SMARTCASH Payment Service Bank Limited (“Smartcash”) has been granted approval in principle to operate a payment service bank business in Nigeria.

Final approval is subject to the Group satisfying certain standard conditions within six months.

“I am very pleased that Smartcash has been granted an approval in principle to operate a service bank business in Nigeria. We will now work closely with the Central Bank to meet all its conditions to receive the operating licence and commence operations,” Segun Ogunsanya, CEO, Airtel Africa, said.

“The final operating licence will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services. I am looking forward to working closely with the Government, the Central Bank and traditional financial institutions to expand financial inclusion and meet the evolving needs of our customers and the economy.”

PSBs are expected to leverage on mobile and digital channels to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services.

Consequently, PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion.

The payment Service Banks (PSBs) are to maintain not less than 75% of their deposit liabilities in the Central Bank of Nigeria (CBN) securities, Treasury Bills (TBs) and other short-term federal government debt instruments at any point in time.

The minimum capital requirement, application and licensing fees for PSBs are minimum capital N5 billion, non-refundable application fee of N500,000.00, non-refundable licensing fee N2 million and change of name fee of N1,000,000.00.

“I think we need to put this in the context of Telco’s customer base, which outstrips any bank in Nigeria and the prospect for cannibalising bank’s mobile and USSD payment channels, which have been a major source of non-funded revenue over the past few years and which have grown in double digits in the past 2 years across most banks,” an analyst speaking to MoneyCentral on the implication of the PSB licenses said.

“We may also put this in the contest of the strong performance of Telco payments services offerings in markets like Kenya and recent in-roads in Ghana.”

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