Why does a business require an MMO licence?
Every technology solution service provider, in whatever sector, is most likely interested in how to reduce stress for customer’s subscription and payment through digital channels. One of the notable features of most online platforms is the provision of e-wallet services. A business owner or promoter of a financial technology service company seeking to provide solution of financial inclusion to the unbanked and semi-banked Nigerians should note that a Mobile Money Operators’ (“MMO”) license from the Central Bank of Nigeria (“CBN”) is one of the required fintech licences in Nigeria, depending on the scale of your business operations, the products or services to be offered and their features.
The other kinds of fintech licences are the Payment Service Bank (“PSB”) licence, the Payment Solution Services (PSSs) licence, which is composed of the Payment Terminal Service Provider (“PTSP”) license, the Payment Solutions Service Provider (“PSSP”) license, the Switching and Processing licence and the Super Agents licence.
How is MMO licence different from other payments system licence?
The MMO license allows its holder to operate a wide spectrum of mobile money services beyond the activities that are permissible for Super Agent licensees. Such other services include issuing e-money, creating and management of e-wallet, pool account creation and management, recruitment and training of agents, etc.
Please note that only MMO licensees are similar to deposit taking institutions and duly permitted under Nigerian law to hold customer funds. Companies with other payments system licences are not permitted to hold customer funds.
Can an existing Company combine MMO business with its existing business?
No, the CBN guidelines provide that each business under the supervision of the CBN shall be operated by stand-alone companies. Also, the object clauses in the Memorandum and Articles of association of every payments service company must be limited to the permissible business activities as stipulated under their respective licensing categorisations.
However, companies seeking to combine activities under the switching and MMO categories may be permitted by the CBN if such company seeks to do so under a holding company structure with the subsidiary entities (separately holding switching licence and MMO licence respectively) clearly delineated to prevent comingling.
Please note that payments system companies in the Payment Solution Services (“PSS”) category may apply for and hold any of Payment Terminal Service Provider (“PTSP”), Payment Solutions Service Provider (“PSSP”) and Super Agents licence or a combination of the licences.
Is there a share capital requirement for a company seeking MMO licence?
Yes. The minimum issued share capital of a company seeking to apply for an MMO license must be N2 Billion. The MMO is in the same category with Switching and Processing licence in terms of the minimum share capital requirement. Both must be incorporated with N2 Billion share capital and all shares must be fully allotted and paid up.
The minimum share capital requirement is contained in the CBN Circular on New Licence Categorisations for the Nigerian Payments System dated 9th December 2020 (Ref: PSM/CIR/GEN/CIR/01/22) signed by the Director, Payments System Management Department.
Is there any Cash Deposit Requirement for MMO application?
Yes. An applicant for MMO licence is required to make a deposit of a refundable N2 Billion into an escrow account domiciled with the CBN. The deposit must be made before the completion of the licence application process.
The CBN is empowered to hold the money till when the MMO licence is granted or the applicant withdraws its application and may invest the total sum or any part of the amount. Where the CBN invests the money or any part thereof, the CBN would pay the applicant the N2 Billion with the accrued interest less administrative charges.
The refund of the N2 Billion will be made by the CBN to the source account of either the promoter of the MMO company (in case of the a new company) or the corporate account of the MMO company (in case of an existing company and the payment was made from its corporate account to CBN).
Is there a condition precedent to applying for making MMO licence application?
An already licensed payment service company (for any other category of payments service licence) seeking an MMO licence is required to first obtain a no-objection approval from the CBN through the Payments System Management Department before submitting its application for MMO licence.
Can an MMO licensee collaborate with another licensed payments system company?
Yes. However, all collaborations between licensed payments service companies, banks and other financial institutions in respect of products and services are subject to CBN’s prior approval.
What are the requirements for obtaining Mobile Money License?
The following are the requirements to be submitted to the Central Bank of Nigeria with the application for MMO licence:
- Application Letter to the Director of Payments System Management Department of the CBN;
- Evidence of formation of the consortium that will deploy the project (Certificate of Incorporation);
- The Consortium’s profile and functional contact e-mails and telephone numbers;
- Memorandum and Articles of Association;
- Shareholders Structure of the Consortium;
- Certified documents by Corporate Affairs Commissions showing statement of share capital, allotment of shares and particulars of directors;
- Curriculum vitae of Board and Management of the applicant Company;
- Organogram of the Company;
- Business Plan which must contain the following details:
- Nature of business;
- Features of the scheme;
- Security features that will be put in place;
- Three (3) years financial projections of the company;
- Transaction and other charges that will be borne by the customers;
- Profit sharing agreement amongst the parties; and
- Diagrammatic illustration of transaction flows.
10. Information Technology Policy of the Company which must include the following:
- Privacy Policy
- Information Ownership/Disclosure/Loss Policy
- Backup and Restore Policy
- Network Security Policy
- Encryption Policy
- Confidential Data Policy
- Password Policy
- Third Party Connection Policy
- Incidence Response Policy
- Physical Security Policy
11. Enterprise Risk Management Framework;
12. Contingency and Disaster Recovery Plan (Business Continuity Programme)
13. Draft Agreements with the following:
- Technical Partners;
- Participating Banks;
- Switching Company(ies);
- Merchants;
- Telecommunication company(ies); and
- Any other third party
14. Tax Clearance Certificate for three (3) years of each party in the Consortium;
15. Project Development Plan (time, location, operation, etc.);
16. Payment of non-refundable Application Fee of N100,000 (One Hundred Thousand Naira) made to the CBN via RTGS Third Party Transfer;
17. Evidence of payment of N2 Billion Shareholders’ Fund unimpaired by losses to CBN.
What are the Costs for incorporation and licensing of an MMO company?
The relevant costs are in two phases: incorporation stage and licensing stage:
- Incorporation Stage:
The total cost of incorporation of a N2 billion company in Nigeria is N25,005,000 (Twenty-Five Million, Five Thousand Naira) being a total of CAC filing fee of N10,005,000 (Ten Million, Five Thousand Naira) and stamp duty of N15,000,000 (Fifteen Million Naira) chargeable by the Federal Inland Revenue Service upon the N2 billion share capital at 0.75%.
- Licensing Stage:
The cost of obtaining MMO license is N1,100,000 (One Million, One Hundred Thousand Naira only) which comprises the Application fee of N100,000 (One Hundred Thousand Naira) and a license fee of N1,000,000 (One Million Naira).
There are other costs associated with drafting supporting documents, miscellaneous costs as well as professional fees.
What is the possible timeline for obtaining the MMO licence?
The application process is in two stages: The Approval in Principle stage which should be between 2 to 3 months; and the Final Licence stage when the final licence should be obtained, which usually it takes another 2 to 3 months.
What are the other licences, scope of services and share capital requirements?
| Licence Category | Permissible Business Activities | Share Capital |
| Regulatory Sandbox | As determined in the Sandbox. The Regulatory Sandbox Category is aimed at stimulating innovation and deepening financial inclusion. To this end, the CBN shall review the products and solutions to applicants (licensed institutions, FinTechs, innovators and research) during its implementation. | No stipulated share capital yet |
| Payment Solution Services (PSSs) | As permissible under Super Agents, PTSPs and PSSPs | N250 Million |
| Payment Terminal Service Provider (PTSP) | PoS Terminal deployment and services, PoS terminal ownership, PTAD, Merchant/agent training and support. | N100 Million |
| Super Agents | Agent recruitment, management and other activities as specified in the Regulatory Framework for Licensing Super Agents in Nigeria | N50 Million |
| Payment Solution Services Provider (PSSP) | Payment processing gateway and portals, payment solution/application development, merchant service aggregation and collection | N100 Million |
| Mobile Money Operation | E-money issuing, wallet creation and management, pool account management and other activities permissible under Super Agent licence. | N2 Billion |
| Switching and Processing | Switching, Card Processing, Transaction clearing and Settlement Agents Services, non-bank acquiring services and other activities permissible under Super Agents, PTSP and PSSP. | N2 Billion |
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About KORIAT & CO.
We are a commercial law firm with head office in Lagos, Nigeria. We assist clients from different nationalities in company registration and processing of business licence in Nigeria, Ghana, Kenya and Rwanda. We also provide company secretarial services and general legal support for registered businesses.
The above article is not legal advice and does not automatically make our readers our clients unless they specifically instruct us to act or represent them in any way.
Please contact Koriat & Co. through admin@koriatlaw.com or 09067842241 (also WhatsApp) if you require additional information about or assistance in registering or getting a fintech licence in either payment or lending sectors.
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