Licence renewal for Payment Service Providers (PSPs) and other Fintech companies is more than a routine regulatory requirement. It is a critical test of compliance, governance, and operational resilience. The Central Bank of Nigeria (CBN) uses the renewal process to assess the credibility and stability of licensed institutions.
Unfortunately, many PSPs and Fintech companies in Nigeria experience delays or even outright rejection during licence renewal due to avoidable compliance mistakes.
These mistakes do not merely slow down the licence renewal process, they also negatively affect the CBN’s rating of the company, trigger unnecessary regulatory scrutiny, and in severe cases, jeopardize the licence itself. For PSPs and Fintechs operating in Nigeria’s fast-growing digital economy, avoiding these pitfalls is essential to maintaining trust, protecting reputation, and ensuring uninterrupted operations.
This article highlights 10 common mistakes that often undermine licence renewal applications and explains how to avoid them as follows:
- OBTAINING THE WRONG LICENCE OR EXCEEDING PERMISSIBLE ACTIVITIES
The Central Bank of Nigeria (CBN) has created distinct licence categories to regulate different aspects of the payment ecosystem each with specific permissible activities outlined in the CBN guidelines. Some of the categories of licence issued by the CBN and their permissible activities are stated in the table below:
| S/N | LICENSE TYPE | PERMISSIBLE ACTIVITIES | CAN HOLD FUNDS? | CAPITAL REQUIREMENT | EXAMPLE |
| 1. | Payment Service Provider (PSP) | Full financial ecosystem (wallets, remittances, savings/ investments, agency banking) | Yes | N5Billion | Opay, Palmpay, Kuda |
| 2. | Mobile Money Operator (MMO) | Mobile wallets, agent networks, P2P transfers, bill payments | Yes | N2Billion | MTN Momo, Paga |
| 3. | Switching & Processing Companies | Transaction routing, card processing, settlement infrastructure | No | N2Billion | Flutterwave, Paystack, Remita |
| 4. | Payment Solution Service Providers (“PSSP”) | Payment gateways, merchant aggregation | No | N100million | Jupiter Payment, Appglobal Payment |
| 5. | Payment Terminal Service Providers (“PTSP”) | POS terminal deployment & support | No | N100million | Jupiter Payment, |
| 6. | Super Agents | Agent recruitment & management | No | N50million | Libertypay, Jupiter Payment |
| 7. | Payment Solution Services (PSS) | The combination of all the permissible activities of the Super Agents, PTSP, and PSSP (i.e. agents, POS, gateways) | No | N250million | Jupiter Payment |
From the above tabulated illustration, each licence comes with specific permissible activities, capital requirements, and compliance obligations.
One of the most fundamental errors PSPs and Fintech companies make is applying for a licence that does not match their actual business model or knowingly engaging in activities outside the scope of their licence. For instance, a PSSP offering wallet services (which only MMOs are permitted to do).
At renewal, the CBN may impose fines, suspend operations, or revoke the licence entirely.
2. FAILURE TO MEET SHARE CAPITAL REQUIREMENTS
One of the most serious compliance lapses that affects licence renewal for PSPs and Fintech companies is failure to meet the minimum share capital requirements prescribed by the Central Bank of Nigeria (CBN).
As shown in the table above each licence categories issued by the CBN mandates specific minimum paid-up share capital thresholds for each licence category to ensure financial stability and resilience. PSPs and Fintech companies are expected to always maintain the share capital requirement at all times. These thresholds are designed to guarantee that licensed operators have sufficient financial strength to absorb risks, protect consumers, and sustain operations.
Importantly, the CBN may, from time to time, review and adjust these share capital requirements in line with economic realities, industry risks, and global regulatory standards. This means that companies must not only meet current requirements but also anticipate possible upward reviews.
Causes for shortfall of share capital requirement of licences operators may include:
- Failure to recapitalize: Companies expand operations but do not inject fresh equity to meet new benchmarks.
- Ignoring regulatory updates: Some firms fail to monitor CBN circulars announcing revised capital requirements.
- Misrepresentation of capital: Attempting to present inflated figures without verifiable evidence, which the CBN detects during renewal scrutiny.
- Losses or poor financial management can reduce net worth of the company below the required threshold.
The CBN will not renew a licence if the company cannot demonstrate compliance with capital adequacy requirements. Non-compliance may attract fines, suspension of operations, or outright revocation of the licence. Falling short of capital requirements signals weak financial health, lowering the CBN’s rating and eroding investor and customer confidence.
3. INCOMPLETE OR INACCURATE DOCUMENTATION
Another common mistake that undermines licence renewal for Payment Service Providers (PSPs) and Fintech companies is submitting incomplete or inaccurate documentation to the Central Bank of Nigeria (CBN). This mistake may arise when Companies fail to attach all required documents, assuming that their prior filings would suffice, submitting expired tax clearance certificates or unaudited accounts, make errors in financial statements, misreporting transaction volumes, or inconsistencies between board resolutions and corporate filings, Poor record-keeping and weak internal compliance systems lead to missing or unverifiable documentation.
The renewal process requires a comprehensive set of documents to demonstrate compliance, financial soundness, and governance integrity. These typically include among others:
- Audited financial statements for the preceding years;
- Tax clearance certificates;
- Evidence of paid-up share capital;
- Board resolutions authorizing (the changes and appointment of key staff in the company, major decisions in company, the renewal application etc);
- Regulatory returns (transaction volumes, fraud reports, AML/CFT compliance);
- Consumer protection and complaint resolution frameworks and other policies;
- Evidence of compliance with data protection and cybersecurity standards.
Missing, outdated, or inaccurate documentation renders the renewal application defective. Inaccuracies raise red flags, prompting audits, investigations, and closer monitoring. The CBN will reject incomplete applications, therefore, the Company’s licence renewal is prolonged the renewal process and at risk of suspending operations.
4. WEAK CORPORATE GOVERNANCE STRUCTURE
A recurring mistake that undermines licence renewal for Payment Service Providers (PSPs) and Fintech companies is the failure to establish and maintain strong corporate governance structures. The Central Bank of Nigeria (CBN) places significant emphasis on governance because it is a key indicator of institutional resilience, accountability, and regulatory compliance.
Corporate governance refers to the framework of rules, practices, and processes by which a company is directed and controlled. For PSPs and Fintechs, this includes:
- A properly constituted Board of Directors with independent and non-executive members (a minimum of five members).
- Clearly defined roles and responsibilities for directors and senior management.
- Functional Board Committees (e.g., Audit Committee, Risk & Compliance Committee).
- Regular board and committee meetings with documented minutes and resolutions.
- Effective oversight of compliance, risk management, and internal controls.
Unfortunately, many PSPs and Fintechs operate informally without a properly constituted board, relying solely on founders or executives. This practice is unacceptable to the CBN and the CBN will not grant licence renewal to any company with such a defect.
Even where a board exists, some companies fail to hold regular meetings or properly document proceedings, leaving governance gaps. Weak corporate governance, whether through lack of a board structure, irregular meetings, or poor documentation, is detrimental to the licence renewal process.
Without effective oversight, companies face heightened risks of fraud, mismanagement, and regulatory breaches. The CBN may impose fines, restrict operations, or suspend licences for governance failures.
5. NON-COMPLIANCE WITH AML/CFT REGULATIONS
Another critical mistake that undermines licence renewal for Payment Service Providers (PSPs) and Fintech companies is failure to comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. The Central Bank of Nigeria (CBN) considers AML/CFT compliance a cornerstone of financial system integrity, and lapses in this area attract severe consequences.
To remain compliant with AML/CFT regulations PSPs and Fintechs are expected to:
- Establish robust Know Your Customer (KYC) procedures.
- Monitor and report suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU).
- Implement automated transaction monitoring systems.
- Maintain accurate customer records and risk assessments.
- File statutory AML/CFT returns promptly.
- Ensure board-level oversight of compliance frameworks.
A fintech company will be in default if it neglects to file Suspicious Transaction Reports (STRs) or Currency Transaction Reports (CTRs) regularly. In addition, firms are expected to conduct periodic staff training on AML/CFT obligations to strengthen compliance culture.
6. POOR CYBERSECURITY AND TECHNOLOGY STANDARDS
In today’s digital payment ecosystem, cybersecurity and technology standards are non-negotiable. The Central Bank of Nigeria (CBN) views PSPs and Fintech companies as custodians of critical national financial infrastructure. Weak cybersecurity controls or outdated technology frameworks are therefore treated as serious compliance failures during licence renewal.
The CBN requires PSPs and Fintechs to:
- Maintain robust cybersecurity frameworks in line with the Risk-Based Cybersecurity Framework for Deposit Money Banks and PSPs.
- Implement secure IT infrastructure, encryption protocols, and data protection measures.
- Report every security breach, no matter how minor, to the CBN promptly.
- File regular cybersecurity reports to the CBN, even if no breaches occurred, to demonstrate proactive monitoring.
- Ensure board-level oversight of technology and cybersecurity risks.
Some PSPs only report when breaches occur, ignoring the requirement to submit regular reports even when there are none. This practice is unacceptable and may result in licence renewal being denied.
7. IGNORING OPEN BANKING AND API STANDARDISATION REQUIREMENTS
With the rollout of Open Banking in Nigeria, the Central Bank of Nigeria (CBN) has mandated that PSPs and Fintech companies adopt API standardisation frameworks to ensure interoperability, security, and transparency across the financial ecosystem. Ignoring these requirements during licence renewal is a serious compliance lapse.
Open Banking requires PSPs and Fintechs to:
- Develop and maintain standardised APIs that allow secure data sharing between banks, PSPs, and third-party providers.
- Comply with CBN’s Open Banking Guidelines and technical standards.
- Ensure data privacy and customer consent management in line with the Nigeria Data Protection Act.
- File regular compliance reports with the CBN to demonstrate adherence.
- Report every API-related security breach promptly to the CBN.
- Submit regular “nil reports” even when no breaches occur, to show continuous monitoring.
8. FAILURE TO APPLY FOR RENEWAL WHEN DUE, PAY RENEWAL FEES, AND MEET DEADLINES
Most Fintech operators are required to apply for licence renewal at least three months before expiry. However, it is surprisingly a common that PSPs and Fintech companies miss their renewal timelines, fail to pay renewal fees promptly, or neglect to submit applications when due. The CBN treats timeliness as a measure of regulatory discipline, and lapses here can jeopardize the renewal process.
Common causes include poor planning, inadequate compliance calendars, and waiting until the last minute to prepare documents.
Without timely renewal, companies risk being barred from offering services, leading to customer attrition and revenue loss.
9. UNRESOLVED CUSTOMER COMPLAINTS AND POOR CONSUMER PROTECTION FRAMEWORK
Another major compliance failure that undermines licence renewal for Payment Service Providers (PSPs) and Fintech companies is inadequate consumer protection practices, particularly when customer complaints remain unresolved or when there is no structured framework for handling them. The Central Bank of Nigeria (CBN) places strong emphasis on consumer protection as part of its oversight of financial institutions, and lapses in this area are treated as serious red flags.
CBN expects PSPs and Fintechs to:
- Establish a formal complaint resolution framework with clear timelines.
- Maintain a dedicated customer service desk or unit.
- Track and document all complaints, resolutions, and escalation processes.
- File regular consumer protection reports with the CBN.
- Ensure board-level oversight of consumer protection policies and practices.
- Train staff on handling customer complaints and feedback.
- Hold regular board and committee meetings to review complaint trends and approve corrective measure.
10. FAILURE TO OBTAIN APPROVALS OR NOTIFY CBN OF SERVICE LEVEL AGREEMENTS (SLAS) AND PARTNERSHIPS
Another serious mistake PSPs and Fintech companies make during licence renewal is entering into Service Level Agreements (SLAs) or strategic partnerships without obtaining prior approvals or notifying the Central Bank of Nigeria (CBN).
The CBN requires PSPs and Fintechs to:
- Seek regulatory approval before entering into significant partnerships, especially those involving outsourcing of core services, technology providers, or cross-border collaborations.
- Notify the CBN of all SLAs with third parties, including vendors, processors, and service providers.
- Ensure that SLAs and partnerships comply with CBN’s outsourcing guidelines, consumer protection standards, and risk management frameworks.
- Maintain board-level oversight of partnerships, with regular board and committee meetings reviewing SLA performance and compliance.
Failure to comply may result in licence renewal being denied, and unapproved partnerships can expose companies to legal disputes, service disruptions, or consumer protection failures.
In conclusion, licence renewal is not a box-ticking exercise. It is a strategic compliance milestone that determines whether a PSP or Fintech license operator remains a trusted participant in Nigeria’s regulated payment ecosystem. The mistakes outlined above, ranging from poor documentation and weak governance to non-compliance with AML/CFT and cybersecurity standards are avoidable with proper preparation and a proactive compliance culture.
By treating licence renewal as a compliance health check, companies can strengthen their standing with the CBN, reduce the risk of regulatory sanctions, and build investor and customer confidence. In today’s competitive fintech landscape, regulatory credibility is as important as innovation. PSPs and Fintechs that prioritize compliance will not only secure smooth licence renewals but also position themselves for sustainable growth in Nigeria’s evolving financial ecosystem.
To achieve this, PSPs and Fintechs should engage a qualified company secretary preferably a lawyer who can advise on governance, assist with the renewal process, and ensure proper board structures and committees are established and maintained. This professional support not only enhances compliance but also positions the company for sustainable growth in Nigeria’s evolving financial ecosystem.
