Globacom and other telcos interested in the fintech sector would most likely not get a Payment Service Bank (PSB) licence this year. This indication came after the CBN unofficially extended the 6 months deadline given to telcos that have been issued the Approval in Principle (AIP) for a PSB.
In September 2019, the Central Bank of Nigeria issued 3 AIPs to two telcos (Globacom’s Money Master, and 9Mobile’s 9PSB) and Unified Payments, a financial technology company set up by Nigerian banks.
Unmet condition for PSB licence
Soon after issuing the AIP, the regulator announced that it will not licence more PSB operators until it certifies that the initial three AIP awardees were able to meet up with the requirements at the end of the 6 months window.
The PSB licence allows telecommunication companies to offer payments and remittance services, issue debit and prepaid cards, deploy ATMs, and other technology-enabled banking services.
The six-month deadline from the day the licence was issued in 2019 is fast running out. However, there is little indication on the ground that the conditions have been met.
Speaking on the AIP process, the Director of Payments System Management at CBN, Musa Jimoh recently said the AIP process was still ongoing and had not concluded.
“Three companies have actually been granted the AIP and they are going through the AIP period. Once they are done and we have certified that they have fulfilled the requirements of the AIP, then the commercial licence would be given to them. So the stage they are now is AIP for them to bring together all the things that they need to go commercial,”Musa Jimoh, the Director of Payments System Management CBN
According to the CBN the requirement to grant the final licence includes an inspection of the premises and facilities of the proposed bank, checking the original copies of the documents submitted in support of the application for license, and verify the integration of its infrastructure with the National Payments System, among other things.
With the CBN extending the 6 months window for the recipients of the AIPs to meet the requirements of getting the PSB licence, telcos will probably not be able to get the licence until next year (September 2020 + 6 months = March 2021).
Telcos in the Fintech Industry
Although the PSB licence which is supposed to permit telcos to offer payments, remittance and other financial services haven’t been issued yet, the AIP (the closest licence to the PSB) is an indication that the CBN is willing to issue the licence.
MTN Nigeria which has been actively pushing for the licence was recently granted a full Super Agent license. The Super Agents licence allows MTN to provide shared agent networks that carry out services such as – cash deposits and withdrawals; bills payment; funds transfer services (local money value transfer); among other agent mobile services.
However, super-agents need to partner with a financial institution (in the case of MTN, GTBank) as part of its documentation licence. This keeps the telco under some form of supervision by the selected financial institution.
Also, the telco won’t be able to offer its full MTN Mobile Money service (MoMo) in Nigeria. This is because MTN needs a PSB licence to allow users to store funds in their MTN Mobile Money service. The super agents just allow telcos to store funds with the banks and not in wallets.
Telco will still get the PSB licence
Even though the issuance of the PSB licence may delay, it will probably be granted. While speaking on the AIP, Jimoh suggested that the CBN already sees telcos involved in the financial space. He added that they are looking to direct it at areas with financially excluded people.
“You know it is a niche banking service where they are expected to provide digital financial services. As a matter of fact, all their products and services should be digital and should happen in the hinterlands in areas where you have the most vulnerable and financially excluded people,”Musa Jimoh, the Director of Payments System Management CBN
In summary, the CBN is not in a hurry to grant the PSB licences so telcos may have to wait for a while. However, all indications point to the fact that the much-coveted PSB licence will eventually be issued.
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