Types of Fintech Licenses Required for Operation in Nigeria

Nowadays, the field of fintech is developing quite quickly. A lot of businessmen want to enter the market with new monetary solutions. Nevertheless, launching such an entity demands abidance by severe rules put forward by CBN and other institutions. In case you do not have an official permit, your company can encounter various fiscal punishments.

This article will make you go over the main data regarding this topic.

The Local Regulation

The fintech landscape of the region in question is mainly controlled by the CBN alongside the SEC and the NCC. The number of official permits you are obliged to acquire depends on the model of your entity.

In order to comprehend this complex fintech industry, one should turn to the legal specialist. Eternity Law International can provide you with a highly-qualified lawyer who specializes in local regulations.

Types of Fintech Licenses in Nigeria

The type of permit depends on the offerings you are going to provide. There exist:

1. PSP permit — this one is the most common permit for new entities. It encompasses sub-categories: PSSP, MMO, and PTSP;
2. MFB permit — lets fintechs offer lending services for individuals and small entities;
3. Switching and processing permit — for organizations that manage the movement of fiscal transactions between banks and payment platforms;
4. Regulatory Sandbox permit — for new entities introducing innovative solutions. It provides a safe, supervised space to test new products;
5. IMTO permit — it is useful in case your firm specializes in multinational remittance offerings. It gives legal permission to carry out global movements of money in the boundaries of Nigeria, ensuring abidance and legitimacy.

Applying for a Fintech License in Nigeria

To begin the process of getting a permit, the first step is to gather all compulsory papers. This encompasses your articles of incorporation from the CAC, a thorough entity plan with monetary forecasts, a clear explanation of the technology platform you plan to use and the offerings you intend to give, as well as detailed information about your company’s chiefs and holders of shares.

Once these papers are prepared, the next step is to submit your request to the CBN. This stage is particularly important, as any errors or omissions can cause delays.

Once your request has been analysed and approved by the CBN, you will be demanded to pay. The cost depends on the specific type of permit you are applying for. Since the analysis and approval procedure can take several months, it’s advisable to send your application as early as possible to avoid unnecessary delays.

Compliance Requirements for Licensed Fintechs

After getting a permit, you have to maintain the regulatory standard very closely so that your operation does not become illicit or lead to the loss of your authorization.

Some areas that really need close monitoring are:

• Info Safeguard: The firms shall confirm to the NDPR, which governs how customer information is collected, stored, and used;
• Fiscal Soundness: The CBN has prescribed minimum capital demands that entities will have to maintain. These thresholds will vary but mostly be between ₦100 million and ₦2 billion depending on the permit category;
• AML/KYC Abidance: A strong system should be applied in a company to detect and prevent concealing of illicit money; in addition to that, it should be in line with the KYC protocols that ensure the real identity of the customer, therefore reducing the chances of fraud.

By doing so, they will ensure that their operations and reputation are protected while enhancing the safety of the financial ecosystem.

Conclusion

Eventually, the kind of permit you are obliged to choose depends on different aspects in the boundaries of your entrepreneurship. Turn to a juridical specialist who will help you to select the most suitable for your organization and go through with the procedure of applying.