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Home » Obtaining a Payment Service Bank (PSB) in Nigeria  

Obtaining a Payment Service Bank (PSB) in Nigeria  

The Central Bank of Nigeria (CBN) recently granted payment service bank license to two telecommunication operate as a Payment Service Bank (PSB)companies. This is after these companies met a series of applications and requirements. This license empowers these telcos to complement other banks rather than compete with them.

What is Payment Service Banks?

Payment Service Banks is a corporation that is permitted to use technology and agency banking to mobilize deposits and facilitate transfers from unbanked consumers in rural regions and any other location in Nigeria where they exist. This means that technology-driven companies are granted a license to engage in banking activities such as savings, deposits, and withdrawals in rural areas or places with limited banking activities. 

In August 2020, the Central Bank of Nigeria issued a guideline for granting a license of PSB in Nigeria. The main objective is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households, and other financially excluded entities through high-volume, low-value transactions in a secured, technology-driven environment. In light of the CBN’s existing guidelines, the following types of businesses are eligible to establish PSBs: banking agents, telecommunications companies, retail chains, mobile money operators, switching banks etc. 

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Payment Service Bank license

In addition, these PSB license operators are to operate mainly in rural areas and unbanked locations, deploy ATMs and POS in these locations, issue ATMs card when needed, use their channel to reach out to customers, establish centers, kiosks, or outlets to reach out to customers in rural communities etc. 

Functions of the Payment Service Banks 

The PSB license operators shall carry out the following functions which include:

  • Accept deposits and withdrawals from individuals and small businesses
  • Issue debits and prepaid cards in its name 
  • Operate electronic wallet
  • Issue financial advice 
  • Carry out such other activities as may be prescribed by the CBN from time to time.

Although, the PSB license operators are granted licenses to complement commercial banks, however, they are limited from performing other activities which include: 

  • Grant loans
  • Accept foreign currency deposits and deal in foreign exchange markets 
  • Granting insurance products 
  • Accept any closed scheme electronic value (e.g. airtime) as a form deposit or payment

License requirement for Payment Service Banks 

To obtain a Payment Service Bank license, there are two steps to follow which include:

  • Obtain the Grant of Approval-in-Principle (AIP)
  • Obtain the Grant for a Final Banking License 

Requirements for the Grant of Approval in Principle (AIP) 

The first step to obtaining a PSB license is to submit a formal application for the grant of a Payment Service Bank license addressed to the Governor of the CBN attached with a proposal to be submitted to the Director, Financial Policy and Regulation Department (FPRD), CBN. The proposal shall contain the business case, vision and strategy, corporate governance arrangements, risk management, compliance; and financial viability. This is therefore followed by: 

  • A non-refundable application fee of N500,000 (five hundred thousand Naira only) in bank draft, payable to the Central Bank of Nigeria or such other amount as the CBN may specify from time to time
  • Evidence of capital contribution made by each shareholder
  • Evidence of name reservation with the Corporate Affairs Commission (CAC) 
  • Detailed business plan or feasibility report 
  • Draft copy of the company’s Memorandum and Articles of Association (MEMART)
  • A written and duly executed undertaking by the promoters that the bank will be adequately capitalized for the volume and character of its business at all times, and that the CBN shall have powers to supervise and regulate its operations
  • Shareholders’ agreement providing for disposal/transfer of shares as well as authorization, amendments, waivers, reimbursement of expenses
  • Statement of intent to invest in the bank by each investor
  • Technical Services Agreement
  • Detailed Manuals and Policies, particularly

Although, the process is slightly different for corporate investors as the promoters shall forward the following additional documents:

  • Certificate of Incorporation and certified true copies of other incorporation documents
  • Board resolution supporting the company’s decision to invest in the equity shares of the proposed bank
  • Names and addresses (business and residential) of owners, directors, and their related companies, if any; and
  • Audited financial statements & reports of the company and Tax Clearance Certificate for the immediate past 3 years.

Where all the above requirements have been met, the CBN shall notify the applicant of its decision within 90 days. When the CBN is pleased with the application, it will grant the applicant an Approval-in-Principle (AIP).

In addition, it is worthy to note that, the payment service bank applicants shall not incorporate/register their name with the CAC until an A.I.P has been obtained from the CBN in writing, a copy of which shall be presented to the CAC for registration.

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Requirements for the Grant for a Final Payment Service Bank License

The applicants of a planned PSB must apply to the CBN for the grant of a final license not later than six (6) months after receiving the A.I.P. The application shall be accompanied by the following: 

  • Non-refundable licensing fee of N2,000,000.00 (Two Million Naira Only) in bank draft payable to the Central Bank of Nigeria
  • Certified True Copy (CTC) of Certificate of Incorporation of the bank
  • CTC of Form CAC 1.1
  • Evidence of the location of Head Office (rented or owned) for the take-off of the business 
  • Schedule of changes, if any, in the Board and Shareholding after the grant of AIP; 
  • Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, telecommunications, to perform the bank’s operations and meet CBN and other regulatory requirements; 
  • Copies of letters of offer and acceptance of employment in respect of the management team;
  • Detailed resumes of top management staff; 
  • Completed Fitness and Propriety Questionnaire; and sworn declaration of net worth executed by top management staff;  
  • Bank Verification Number (BVN) and Tax Clearance Certificate of each top management staff;
  • Comprehensive plan on the commencement of the bank’s operations with milestones and timelines for the roll-out of crucial payment channels; and
  • Board and staff training program.

Following that the above requirements have been met, the central bank of Nigeria shall conduct other inspection, which includes: checking the physical structure of the building, verifying the capital contributions of the promoters, meeting with the Board and Management team whose resumes had earlier been submitted to the CBN, check the original copy submitted in support of the license. 

Additionally, the minimum share capital for companies or investors seeking to be granted a PSB license is Five billion Naira (₦5,000,000,000.00)


More than 51% of adults in Nigeria operate via the banking system. There is a strong need for the unbanked or the banking illiterate to access banking activities at their convenience. For this reason, the CBN is making a heads way to grant the PSB license to entities and investors who seek to comply with its policies and obtain its objectives. 

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