Nigeria Inter-Bank Settlement System (NIBSS) raises concern over Unlicensed Financial Services Companies
The Nigeria Inter-Bank Settlement System (NIBSS) has raised concerns over unlicensed financial services companies posing as deposit-taking institutions, in a sign that the industry is looking to step up regulatory enforcement following outcry over fraud and lapses in customer verification processes by payment providers.
In a memo to banks, fintechs and other payment providers, the Nigeria Inter-Bank Settlement System (NIBSS) warned that companies holding switching, payments processing, and superagent licenses are non-deposit-taking institutions and should not be listed as beneficiary institutions when customers attempt to make bank transfers.
Superagents, payment solution service providers (PSSPs), and switches are three crucial players providing payment infrastructure and offline distribution that have accelerated financial inclusion over the last decade. The PSSP license category authorizes companies such as Paystack, Flutterwave, and eTranzact, to operate digital gateways for card payments and money transfers by everyday consumers and enterprise customers.
“Listing [these] institutions… as beneficiary institutions on your NIP funds transfer channels contravene the CBN Guidelines on Electronic Payments,” said Ngover Ihyembe-Nwankwo, executive director of business development at NIBSS, wrote in the memo sent Dec. 5.
NIBSS — which operates Nigeria’s ubiquitous instant payments system used by all financial services providers — ordered commercial banks, mobile money operators, and microfinance institutions to disable outward fund transfers into wallets operated by these firms.
A switching license allows fintechs, such as Remita, HabariPay, Moniepoin, and Interswitch, to quickly settle transactions without relying on the real-time infrastructure provided by NIBSS. And the superagent license, used by Y Combinator-backed Nomba and Interswitch Financial Inclusion Services Limited (also called Quickteller Paypoint), has been a pivotal category driving financial inclusion, authorizing companies to build a network of retail agents armed with a point-of-sales device to provide payments services across the country.
However, some companies holding any of the three licenses might also hold other banking licenses, allowing them to hold deposits. Companies like Moniepoint simultaneously hold a microfinance bank license which ensures deposits are insured by the Nigeria Deposit Insurance Corporation (NDIC). Telecom companies like MTN and Airtel both hold a superagent license and a payments service bank license, allowing them to operate a wide range of services.
With the information technology revolution in the banking and financial service ecosystem globally, the Central Bank of Nigeria, CBN has given license to some financial technological service operators to provide technological solutions in the financial sector of the Nigerian economy. About 44 top CBN-approved fintech companies are operating in Nigeria. Other fintechs operate in Nigeria without the Central Bank of Nigeria’s approval.
Some of these fintechs are payment service banks, some are payment service agents, peer-to-peer payment platforms, savings and investment platforms, online payment platforms, interbank settlement systems, etc.
We understand that there are many of these fintechs, but we only provided a list of some of them. If you know or own any fintech that ought to be on this list, do well to contact us.
Top Fintech Companies Approved by CBN in Nigeria
Payment Service Banks
- Mastermoney PSB
- 9 PSB
- Hope PSB
- SmartCash
- PalmPay
- Momo
Microfinance Banks
- OPay
- Moniepoint
Interbank Settlement System
- Interswitch
- Paystack
International Remittance Operators
- Switch
- ALAT
- Flatterwaves
- Chipper Cash
ATM Service Providers
- Verve (Interswitch)
- Visa
- Master Card
Loan Apps/ Platforms
- Renmoney
- Fairmoney
- Pay Day
- Palmcredit
- Soko Loan
- Paylater
- Chatpay
- NaijaFund
- Okash
- Branch
Payment Wallets
- Paga
- Quickteller
- Carbon
- Arear Ticket
- eTranzact
- Vogue Pay
- KudiMoney
- Wallet.ng
- E-Ranzact
- Remita
- Kolopay
Savings & Investment Platforms
- PiggyVest
- Cowrywise
- Payvest
- I-invest
- Kuda Bank
- Bank with Mint
- Farm Crowdy
- Patricia.com
- Sumo Trust
