How To Set Up A Money Lending Company
If you are an owner or promoter of a financial technology service company seeking to provide solution of financial inclusion to the unbanked and semi-banked Nigerians, a Mobile Money Operators' ("MMO") license from the Fundamental Banking company of Nigeria ("CBN") is ane of the required license, depending on the calibration of your business operations, the products or services to be offered and their features.
The other kinds of fintech licences are the Regulatory Sandbox licence, the Payment Solution Services (PSSs) licence, the Payment Terminal Service Provider ("PTSP") license, the Payment Solutions Service Provider ("PSSP") license, the Switching and Processing licence and the Super Agents licence.
Below are the relevant features, requirements, process, timeline and costs for obtaining MMO licence, set up out in a question and respond format:
How is MMO licence different from other payments system licence?
The MMO license allows its holder to operate a broad spectrum of mobile money services beyond the activities that are permissible for Super Agent licensees. Such other services include issuing eastward-coin, creating and management of eastward-wallet, pool business relationship cosmos and management, etc.
Please note that just MMO licensees are permitted to hold customer funds. Companies with other payments system licences are not permitted to concord customer funds.
Can an existing Company combine MMO business with its existing business?
No, the CBN guidelines provide that each business nether the supervision of the CBN shall be operated by stand-lonely 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 nether 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 practise so nether a holding company structure with the subsidiary entities (separately holding switching licence and MMO licence respectively) conspicuously delineated to prevent comingling.
Delight annotation that payments system companies in the Payment Solution Services ("PSS") category may apply for and hold whatever 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 majuscule requirement for a company seeking MMO licence?
Yes. The minimum issued share capital letter of a company seeking to utilize 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 letter requirement. Both must be incorporated with N2 Billion share capital letter and must deposit same amount with the CBN earlier the completion of the licence application process.
The minimum share capital requirement is contained in the CBN Circular on New Licence Categorisations for the Nigerian Payments System dated ixthursday December 2022 (Ref: PSM/CIR/GEN/CIR/01/22) signed past the Director, Payments System Management Department.
Is at that place 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 blessing from the Payments System Management Department earlier submitting its application for MMO licence.
Can an MMO licensee collaborate with another licensed payments organization company?
Yes. However, 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 post-obit are the requirements to exist submitted to the Central Bank of Nigeria with the application for MMO licence:
- Application Letter of the alphabet to the Director of Payments System Management Department of the CBN;
- Prove of germination of the consortium that volition deploy the project (Certificate of Incorporation);
- The Consortium's profile and functional contact east-mails and phone numbers;
- Memorandum and Manufactures of Association;
- Shareholders Structure of the Consortium;
- Certified documents by Corporate Affairs Commissions showing argument 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 Program which must incorporate the following details:
- Nature of business organization;
- Features of the scheme;
- Three years financial projections of the visitor;
- Transaction and other charges that will exist borne by the customers;
- Profit sharing agreement amongst the parties; and
- Diagramatic illustration of transaction flows.
10. Data Technology Policy of the Company which must include the following:
- Privacy Policy
- Information Ownership/Disclosure/Loss Policy
- Fill-in and Restore Policy
- Network Security Policy
- Encryption Policy
- Confidential Information Policy
- Password Policy
- Tertiary Party Connection Policy
- Incidence Response Policy
- Physical Security Policy
xi. Enterprise Risk Management Framework;
12. Contingency and Disaster Recovery Plan (Business organization Continuity Programme)
thirteen. Draft Agreements with the post-obit:
- Technical Partners;
- Participating Banks;
- Switching Company(ies);
- Merchants;
- Telecommunication company(ies); and
- Any other third political party
fourteen. Tax Clearance Certificate for iii (iii) years of each party in the Consortium;
15. Project Development Plan (time, location, performance, etc.);
16. Payment of non-refundable Application Fee of N100,000 (Ane Hundred Thousand Naira) made to the CBN via RTGS Third Political party Transfer;
17. Evidence of payment of N2 Billion Shareholders' Fund unimpaired by losses to CBN.
What are the Financial requirements for incorporation and licensing of an MMO company?
The relevant financial requirements 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) beingness a combination of CAC filing fee of N10,005,000 (Ten Million, 5 Thousand Naira) and postage stamp duty of N15,000,000 (Xv Meg Naira) chargeable past the Federal Inland Revenue Service upon the N2 billion share capital at 0.75%.
- Licensing Phase:
The total price of obtaining MMO license is N1,100,000 (One Million, 1 Hundred K Naira only) which comprises the Application fee of N100,000 (One Hundred Thousand Naira) and a license fee of N1,000,000 (Ane One thousand thousand Naira).
There are other costs associated with drafting supporting documents as well equally professional fees.
What is the possible timeline for obtaining the MMO licence?
The application procedure is in ii stages: The Approving in Principle stage which should exist betwixt two to iii months; and the Final Licence stage when the concluding licence should be obtained, which usually it takes another 2 to 3 months.
What are the other licences, scope of services and share majuscule requirements?
| Licence Category | Permissible Business Activities | Share Uppercase |
| Regulatory Sandbox | Every bit 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 inquiry) during its implementation. | No stipulated share upper-case letter even so |
| Payment Solution Services (PSSs) | As permissible under Super Agents, PTSPs and PSSPs | N250 Meg |
| Payment Terminal Service Provider (PTSP) | PoS Concluding deployment and services, PoS terminal ownership, PTAD, Merchant/agent grooming 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/awarding development, merchant service aggregation and collection | N100 Meg |
| Mobile Money Performance | E-money issuing, wallet creation and management, pool account management and other activities permissible under Super Amanuensis 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 |
How To Set Up A Money Lending Company,
Source: https://koriatlaw.com/how-to-set-up-fintech-company-for-mobile-money-operations-application-requirements-and-procedure/
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