Oladele Adeniji and Obinna Osisiogu of Stillwaters Law Firm in Lagos examine Nigeria’s emerging mobile money market and the recent regulatory guidelines issued by CBN.

The Central Bank of Nigeria (CBN) recently reviewed the regulatory framework for the mobile money industry in April 2015 and consequently approved the Guidelines on Mobile Money Services (the Guidelines) in Nigeria.

CBN is authorised by section 47 of the CBN Act which deals with payment and settlement systems, to promote and facilitate the development of efficient and effective systems for the settlement of transactions including the development of electronic payment systems, hence the powers to issue the Guidelines.

The Guidelines specify the minimum technical and business requirements for the various recognised participants in the industry and aims to promote the safety and effectiveness of the industry services.

Two models of mobile money services are identified and established by the Guidelines:

1. The Bank-led Model, which recognises a bank or consortium of banks rendering mobile money services either alone or in partnership with other approved organisations. It stipulates however that the lead initiator must be a bank.

2. The Non-Bank led Model on the other hand recognises duly licensed corporate organisations delivering mobile money services. The lead initiator here must be a duly licensed corporate organisation other than a deposit money bank (DMB) or a Telecommunications provider (Telco).

It acknowledges mobile money agent networks and stipulates that the CBN’s Guidelines for Regulation of Agent Banking issued in 2013 shall apply to them.

In the Guidelines, the MMOs are mandated to obtain periodically reviewable licenses from CBN, a unique scheme code from the Nigeria Inter-Bank Settlement System (NIBSS) and unique short codes from the Nigerian Communications Commission (NCC). As with guidelines for other players in the financial market, the run-off-the-mill Know Your Customer (KYC) requirements are provided for MMOs to comply with. Card transactions are subject to KYC and the Guidelines on the issuance and Usage of Cards in Nigeria. The security of such transactions is taken into consideration by the Guidelines which mandate that they comply with the Payment Card Industry Data Security Standards (PCI DSS).

The Guidelines recognise five participants in the mobile money services industry and assigns certain privileges, roles and responsibilities to them;

1. Banks (as scheme operators): they are expected among other things to provide financial, clearing and settlement services to the mobile payments system and are in charge of verification, approval and accountability for the credibility and integrity of partner organisations.

2. Licensed corporate organisations: these are expected to provide and manage the requisite and compliant solutions for mobile payment services. They are also required to provide access to CBN on a demand basis for on-the-spot assessment and transaction verification, including a monthly assessment performance report. Of note however, is the requirement to keep records of transactions for a minimum of seven years.

3. Infrastructure providers: these are responsible for providing infrastructure to enable switching, processing and settlement facilities for mobile money services.

4. Mobile network operators: CBN’s regulation of the Telcos in this Guideline is mostly concerned with preventing monopoly or anti-competition practices in the mobile money services industry. The Telcos are to provide the telecommunications network infrastructure and are prohibited from favouring any MMO over another in terms of traffic and price. They are of course, to ensure that mobile money services remain free and that airtime value is not used for payment or transfer of monetary value. They are also to file monthly statutory returns to CBN including; nature, value and volume of transactions, incidents of fraud and nature and number of consumer complaints.

5. Consumers: the Guidelines list a series of consumer entitlements. They are however assigned the responsibility of PIN/Password protection, proper confirmation of transaction details before authorisation and prompt reporting of fraud cases, errors and complaints. They are afforded the right to escalate complaints to CBN’s consumer protection department only where resolution of complaints through the bank’s complaint channels are exhausted or unduly delayed.

The critical issue of settlement is addressed and strictly regulated by CBN which mandates that settlement accounts be opened as nominee accounts with DMBs on behalf of MMO customers. A notable feature of the Guidelines, regarding settlement, is the ultimatum that a minimum Shareholder’s Fund unimpaired by losses of ₦2 billion must be maintained by scheme operators, with effect from June 1 2016.

Generally, two levels of settlements are set out:

1. Inter-Scheme Settlement which will be provided by (NIBSS); and
2. Final Settlement which will be effected through the CBN Inter-Bank Funds Transfer System (CIFTS).

There are minimum risk mitigation/management standards covering Credit, Settlement and Business continuity risks. The latter mandates the existence of a board approved Business Continuity Plan (BCP) that must be tested through a fail-over process, at least twice a year.

Apart from providing minimum transaction and technology standards, the Guidelines provide dispute resolution mechanisms. The general disposition of CBN on disputes is anti-litigation and pro-settlement. Customer complaints are expected to be resolved in 48 hours, while disputes arising between parties must be settled within 14 days. Customers are allowed to escalate complaints to CBN where dissatisfied with the above resolution, after which they may resort to arbitration according to the Arbitration and Conciliation Act.

On cessation of services, MMOs are to furnish CBN with a 120-day notice in writing of intention to discontinue operations.

Sanctions for not complying with the Guidelines range from withholding of corporate approval, financial penalties and suspension from operation to revocation of operational license.

Requirements for mobile money license

Upon payment of a non-refundable application fee of ₦100,000 to CBN, the following are required for grant of a mobile money license; consortium’s certificate of incorporation, profile, emails and contact numbers, memorandum and articles of association, shareholding structure, return on allotment of shares and particulars of directors. The applicant is also required to provide curriculum vitae of company’s board and management, company’s organogram, business plan featuring company’s profit sharing agreement and three years financial projections.

The IT policy of the company, enterprise risk management framework, draft agreements with technical partners, switching company merchants and Telcos are also required. The applicant must in addition submit three years tax clearance certificate for each party in the consortium, project deployment plan and evidence of shareholders’ fund of ₦2 billion before the license is issued.

It is indisputable that mobile money is the future of payments the world over. Nigeria as a member of the MINT nations, remains a ripe market for investment in mobile money operations as several organisations, government bodies and enterprises are increasingly resorting to the mobile platform as a means of bill payments, bulk disbursements and merchant payments.

CBN has been forthcoming by laying down well considered regulations in a bid to revamp and reposition the Nigerian mobile money services market. If there was ever a time for increased investment in the mobile money market it is now as the Guidelines point towards CBN’s desire for substantial recapitalisation of the market.

Oladele Adeniji

Senior associate

Stillwaters Law Firm



Obinna Osisiogu


Stillwaters Law Firm