As mentioned in our article about the Nigeria Inter-Bank Settlement System (NIBSS), Mobile Money Operators (MMOs) are one of many electronic payment vehicles utilizing the interbank framework for transfers and reconciliation.

Since the system is closely similar to others such as Electronic Payment Service Providers (EPSPs), we at Monierate felt that there is a need to demystify things, hence, this article.

Mobile Money Operators (MMOs)

Mobile Money Operators (MMOs) are a type of payment solution service provider. What they do, specifically, is to enable the transfer and storage of money on or using a mobile device.

The Money Money Operator creates software, hardware, and other necessary infrastructure which connects with a customer’s device to transform it into a “mobile money machine”. They facilitate access to financial services for the user and attempt to ease the process of safely sending and receiving funds.

In addition, MMOs may carry out the activities of financial players known as Super Agents.

This involves the recruitment and management of human resources known as agents. These agents will work for the recruiting Mobile Money Operator to promote awareness, foster sales, and help users who are encountering challenges with the service.

By accessing a Mobile Money Operator’s service, users can create a digital wallet, acquire a physical or digital card for such wallet and operate, and use these for transacting with other users on MMO platforms.

There is, however, much limit to what MMOs can do in terms of financial operation. Their license does not permit them to undertake insurance, process foreign currency deposits, and provide guarantees, advances and loans.

Two Mobile Money Models Functional In Nigeria

According to the Central Bank of Nigeria (CBN), two mobile money models are identified as operating in Nigeria. These are the Bank-led model and the Non-bank-led model.

1. Bank-led Model:

Saying “bank-led” alone should make it easy to guess what this model is about and the direction in which this description will go. However, for the sake of a good reference, we will still provide details.

The Bank-led model is initiated by a bank or a consortium of banks to provide the said mobile money service by utilizing its access to electronic payment systems.

2. Non-bank led Model:

The non-bank-led mobile money model is quite different from the first. For this one, a licensed corporate organization or a consortium of organisations must be responsible for initiating and managing the service.

This organization can be anything aside from a Deposit Money Bank (DMB). Even telecommunication companies are allowed to start and run businesses in the model if they so desire to.

CBN Licensing Requirements for Mobile Money Operators

You must understand that the development and deployment of businesses such as Mobile Money Operators are always guided by precise, custom-made regulations. And since these operators handle funds transfers, the apex bank must decide what rule will apply.

The following are the licensing requirements for potential and existing Mobile Money Operators in the country:

For a start, all MMOs are required to have a minimum share capital of two billion naira. The business - on registration - will receive unique shortcodes from the NCC and scheme codes from the NIBSS.

In addition to this, MMOs must ensure that their Know Your Customer (KYC) and Anti Money Laundering (AML) processes cover the entire scope required. This helps prevent fraud on the platform.

Steps To Acquire a Mobile Money Operator License from CBN

A long list of procedures accompanies the acquisition of a Mobile Money Operator license in Nigeria. In this section, we break the process into steps to give you a good understanding of what to expect.

1. Setting up a Payment Holding Service Company (PHSC):

The Central Bank of Nigeria (CBN) requires a Payment Holding Service Company structure to be set up as the first step to creating a mobile money operator and acquiring the necessary license.

This structure includes the PHSC company itself operating as a holding company and having two subsidiaries: the Mobile Money Operator and a payment switching and processing company. Furthermore, the Mobile Money Operator will have to create three companies with each of them having the required NGN 2 billion minimum share capital.

Once done, the Payment Holding Service Company under which the new MMO operates can then be registered with the Corporate Affairs Commission (CAC).

2. Submission of Licence Request:

Registering with the CAC does not mean that an MMO can go live. The company still has to submit a license request in the form of an application letter. This is always addressed to the Director of the Payments System Management Department within the Central Bank of Nigeria (CBN).

3. Beginning of Licensing Process:

On accepting a license request, a two-part process begins to establish the license. The first stage is the Approval-in-Principle (AIP) and then there is a final license stage.

The Approval-in-Principle stage begins after a non-refundable fee of NGN 1 million or any other specified amount is paid to the CBN. Such fee is accompanied by the submission of relevant documents also specified by the apex bank. The AIP process is then conducted for a period of two to three months.

The successful MMO will move on to request a final license by submitting another application to the CBN and paying a non-refundable fee of NGN 5 million. Additional documents may or may not be required at this point. Similar to the AIP, this licensing process here takes about two to three months.

Licenses are provided at the end of each licensing stage. After this, the Payment Holding Service Company will inform the CBN of its intention to commence operational activities and provide the following information:

  • Stakeholder’s register
  • Each investor’s share certificate
  • Enterprise Risk Management Framework (ERMF)
  • Internal Control Policy
  • Minutes of every board meeting preceding the commencement of operation
  • Opening statement of affairs signed by auditors and directors
  • Date of commencement of activities

Popular Money Money Operators (MMOs) in Nigeria

Opay

Opay is one of the most popular Mobile Money Operators available in Nigeria. The business was launched in 2018, and today, it boasts nearly 40 million active users with a record of more than 10 million Monthly Active Users (MAU) in March 2023.

Some of the exciting services offered by this MMO include Owealth savings with daily interest, instant and free debit card acquisition, and airtime/data top-up with cashback.

Moniepoint

Moniepoint is another Mobile Money Operator (MMO) worth mentioning. On a broad scale, the business exists and operates as a microfinance bank.

This increases the range of services from the company to include business loans, point-of-sale (POS) services and expense card management. Additionally, more advanced services like payroll, tax management and compliance can also be performed by businesses.

In 2023, Moniepoint reportedly processed about 5.2 billion transactions amounting to USD 150 billion. The company, which received the National Inclusive Payment Initiative Award from CBN, is determined to make payments accessible across the continent and has taken the first step by expanding into Kenya.

PalmPay

Launched in 2019, PalmPay now reportedly has a user base of about 30 million people with over 600,000 merchants and 500,000 agents making up the business side of things.

PalmPay facilitates bill payments, online purchases, and saving and earning, with attractive cashback and bonuses.

Conclusion

Mobile Money Operators (MMOs) are a fast-growing part of the global financial ecosystem. Their appearance in the Nigerian economic scene has drawn the interest of many.