The Central Bank of Nigeria (CBN) has introduced various initiatives to enhance access to financial services for the unbanked population of the Nigerian economy. This included the deployment and facilitation of the use of technology to drive the financial inclusion ambition of the CBN.
To this end, the Guidelines for the Licensing and Regulation of Payment Service Banks (PSBs) in Nigeria were issued in 2018 (revised 2020).
The Payment Service Banks are expected to leverage on technology to provide services that would be easily accessed by the unbanked population and those who are in hard-to-reach areas of the country.
This framework hereby provides a set of regulations that are targeted at streamlining the operations of Payment Service Banks, ensuring transparency in their operations as well as ensuring adequate customer protection. It will also focus on corporate governance, risks management of the PSBs, and safety of funds to the consumers of the Payment Service Banks’ products.
This Framework also aims to ensure that sound risk management practices are embedded in the operations of the Payment Service Banks.
It stated that the PSBs shall use the words “Payment Service Bank” in their names to differentiate them from other banks.
However, the name of a PSB shall not include any word that links it to its parent company or promoter, it added.
Also, the PSBs are expected to operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 percent financial service touchpoints in such rural areas as defined by the CBN from time to time; enter into direct partnership with card scheme operators, among others.
Payment Service Banks are required to comply with relevant extant regulations and CBN’s prudential guidelines and circulars which are issued periodically.