If you’re building a fintech or digital wallet startup in Nigeria, one of the first questions you’ll face is: “Which license do I need?” Surprisingly, many startups get this wrong sometimes with costly consequences.
Let’s break it down.
1. PSSP vs MMO: What’s the Difference?
PSSP (Payment Solution Service Provider)
- A PSSP is a company that provides payment services but does not hold customer funds directly.
- They can facilitate payments between customers and businesses, such as paying bills, sending money, or processing card payments.
- Example: A mobile app that lets users pay for goods and services but the money goes through a bank or licensed payment processor.
MMO (Mobile Money Operator)
- An MMO can hold and manage customer funds directly.
- They offer services like sending, receiving, and storing money on a mobile wallet.
- Example: A telecom-linked wallet where users can deposit cash, pay, and transfer directly within the wallet.
The Common Mistake: Many startups that only want to process payments apply for an MMO license, thinking it covers all wallet activity. The result? Regulatory delays, rejected applications, or worse, penalties.
2. How to Know Which License You Need
Ask yourself:
- Will you store customer funds?
- Yes → You need an MMO license.
- No → You likely only need a PSSP license.
- Will you only facilitate transactions through banks or payment processors?
- Yes → A PSSP license is sufficient.
Understanding this distinction saves time, money, and unnecessary regulatory headaches.
3. How to Obtain the License
For PSSP:
- Register your company with the Corporate Affairs Commission (CAC).
- Prepare business documentation, including your operations model and compliance framework.
- Apply to the Central Bank of Nigeria (CBN) for a PSSP license.
- Meet CBN’s requirements for technology, risk management, and compliance.
- Pay the applicable fees and await approval.
For MMO:
- Same first step: CAC registration.
- Draft a business plan showing how you will manage customer funds safely.
- Submit an MMO license application to the CBN, including compliance, IT security, and anti-money laundering policies.
- Provide proof of minimum capital requirement as set by the CBN.
- Pay fees and get ready for regulatory inspection before approval.
Tip: Consulting a legal or regulatory expert early can help you avoid applying for the wrong license.