Nigeria’s fintech sector is booming, attracting over $798 million in investment between 2021 and 2023, making it Africa’s most vibrant digital finance ecosystem (BFA Global, 2023). However, while innovation is thriving, regulatory compliance remains a major hurdle. Every fintech product—whether a mobile wallet, API aggregator, or digital bank—must operate under a Central Bank of Nigeria (CBN) licence, and understanding which one you need can make or break your growth trajectory.
This guide provides a comprehensive, data-driven breakdown of the major CBN licences, the services they cover, and what startups should expect in terms of capital and compliance requirements.
Why CBN Licences Matter
Fintech without licensing is a legal and operational risk. The CBN’s regulatory framework ensures consumer protection, financial stability, and market integrity. Startups seeking scale, bank partnerships, and investor confidence must secure appropriate licensing early.
Key Licences Every Fintech Founder Should Know
- Switching and Processing Licence
• Best For: Payment infrastructure companies like Paystack and Flutterwave
• Capital Required: ₦2 billion
• CBN Escrow Deposit: ₦2 billion
• Use Case: Real-time transaction switching, settlement, and card processing.
• Fact: These firms process over ₦4 trillion monthly, making infrastructure critical. - Mobile Money Operator (MMO) Licence
• Best For: Wallet-based apps (e.g., Paga, OPay)
• Capital Required: ₦2 billion
• Use Case: Fund transfers, P2P payments, bill payments
• Insight: 38% of Nigerians use mobile wallets; this is the most used licence type for digital payments. - Payment Solution Service Provider (PSSP)
• Best For: Online payment APIs (e.g., Remita)
• Capital Required: ₦100 million
• Use Case: Backend services for digital checkouts
• Market Note: E-commerce volume in Nigeria hit ₦3.2 trillion in 2023, largely facilitated by PSSPs. - Payment Terminal Service Provider (PTSP)
• Best For: POS deployment startups
• Capital Required: ₦100 million
• Use Case: Terminal management and device distribution
• Fact: Nigeria has over 1.3 million POS terminals in use (NIBSS, 2024). - Payment Service Bank (PSB) Licence
• Best For: Digital banks for the unbanked (e.g., 9PSB)
• Capital Required: ₦5 billion
• Unique Requirement: 25% agent presence in rural areas
• Impact: Aimed at closing Nigeria’s 36% financial exclusion gap. - Super-Agent Licence
• Best For: Agent networks (e.g., Baxi)
• Capital Required: ₦50–₦100 million+
• Use Case: Enable last-mile financial services via kiosks or field reps
• Growth Stat: Agent banking transactions surged by 86% YoY in 2023. - CBN Regulatory Sandbox
• Best For: Pre-licence innovation testing
• Capital Requirement: None (during sandbox phase)
• Application Timeline: 45–60 days
• Use Case: MVP testing with CBN oversight
• Advantage: Ideal for novel solutions unsure of licence fit.
Strategic Takeaways for Fintech Startups
• Licence cost isn’t just about capital. Consider escrow deposits, tech certifications (e.g., PCI-DSS), and operational structures.
• Choose scalability. Some licences allow more vertical growth—Switching & MMO licences support cross-market expansion.
• Sandbox is smart. Start here to test product-market fit without major financial commitments.
• Licensing attracts investors. Regulated startups are more likely to raise funding, access banking partnerships, and build user trust.
Conclusion: CBN licensing is not just a requirement—it’s a strategic foundation for fintech growth in Nigeria. Knowing what licence aligns with your business model and scaling goals ensures you’re not only compliant but also investment-ready and market-aligned.
Build smart. Grow right. Stay compliant.
