A Breakdown of CBN Guidelines on Mobile Money Services in Nigeria

The commercial introduction of mobile communications technology in the world soon enough led to its practical application in the provision of financial services through telephone platforms for carrying out personal transactions, in particular person-to-person electronic/digital payments.

In Nigeria, this led to the Central Bank of Nigeria (CBN), in exercise of its powers conferred by the Central Bank of Nigeria Act 2007, eventually initiating the Central Bank of Nigeria Guidelines on Banking Services. mobile money in Nigeria (or ‘the guidelines’) which will be the subject of this article, specifically the following topics:-

– The objectives of the Guidelines for the Licensing, Supervision and Regulation of Mobile Money Services in Nigeria.

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– The position of the guidelines on suitable models and participants of a mobile money service program in Nigeria.

– The authorized operating structure of mobile money operators (MMOs) in Nigeria.

– The basic provisions of the guidelines on licensing, use of agency networks, end-user activation, transactions and participants’ rights/obligations.

– Licensing requirements for MMOs in Nigeria.

What are the Goals of the CBN Guidelines on Mobile Silver Services in Nigeria?

The objectives of the guidelines are:-

– promote the security and efficiency of mobile money services and thereby build user confidence;

– to specify the minimum technical and commercial requirements for the various players recognized for the mobile money services industry in Nigeria;

– ensure a structured and orderly development of mobile money services in Nigeria with a clear definition of the different actors and their roles and responsibilities;

– addressing the business rules governing the operation of mobile money services and specifying the basic functionalities expected of any mobile payment service and solution in Nigeria.

What are the declared models of Mobile Silver Service Operations authorized below the Guidelines?

The CBN guidelines provided for 2 models of mobile money services which are:-

The Led by the bank Model :- Which is a mobile money service operation having a bank or a consortium involved by a bank as the lead initiator.

The Non banking LEDs Model :- This is a mobile money service operation conducted by a company other than a bank or telecommunications company duly licensed by the Central Bank of Nigeria.

What is the Operating structure of MMOs as provided for below the Guidelines?

MMOs under the Guidelines are required to operate as consortia with at least 3 major participating companies.

Do the guidelines have any specific provisions on the maintenance of Agency networks in Mobile Silver services?

No. The CBN Guidelines on Mobile Money Services are based solely on the CBN Guidelines on Banking Agents and Banking Agent Relationships in Nigeria.

What are the rules of the Guidelines on the specific publish of Licence?

The guidelines provide that all mobile money operators (MMOs) must:-

– be approved by the Central Bank of Nigeria;

– be assigned a unique scheme code by the Nigerian Interbank Settlement Scheme (NIBBS) for the purpose of interoperability management;

– be assigned a unique short code by the Nigerian Communications Commission;

– ensure that all telecommunications equipment is approved by the Nigerian Communications Commission;

– register users of its system based on technology standards and guideline requirements;

– ensure that the registration process within its mobile money program meets all the Know Your Customer (KYC) requirements specified in the Guidelines.

What are the provisions of the Guidelines on Final user Activation of Mobile Silver services?

The guidelines provide that with respect to the issue of end-user activation:-

– a mobile money system requires a registered user to activate the service before transactions begin with a security code that is a personal identification number (PIN) or password;

– an MMO must ensure that the activation process is not compromised or altered within its infrastructure.

What are the provisions of the Guidelines on Mobile Silver transactions?

With regard to transactions, the guidelines provide that:-

– all MMOs notify the CBN of their designated settlement banks;

– no airtime deduction will be made in respect of fees on any transaction;

– all obligations arising from mobile payment transactions will be settled on dedicated settlement accounts domiciled with depository banks. MMOs are also required to maintain separate accounts for their other business activities;

– all transactions initiated and concluded within the mobile payment system must have a unique transaction reference issued;

– all transactions must have a transaction reference number, payor and payee phone number, transaction amount, transaction date, timestamp and other relevant transaction details and unique identifiers ;

– where transactions involve merchants, the following details must be provided in addition to the category of merchant and its addresses and codes (?);

What Where who are the identified attendees of a Mobile Silver Service Operation as authorized below the Guidelines?

The participants in a Mobile Money Service Operation as provided for in the Guidelines are: –

1). Banks

2). Approved companies

3). Infrastructure providers – Switching, processing and settlement facilities for MMOs

4). Consumers/end users

What are the Licence terms for MMOs below the Guidelines?

License requirements for MMOs are:-

– Proof of the formation of the consortium that will deploy the Mobile Money project (in the form of a certificate of incorporation).

– The profile and functional emails and telephone numbers of the Consortium.

– The MEMART (Memorandum/Statutes) of the Consortium.

– The shareholder structure of the consortium.

– The statutory forms for allocating shares and the contact details of the directors of the Consortium.

– CV (Curricula Vitae) of the board of directors and the management team of the Consortium.

– An organizational chart of the consortium.

– A consortium company which must include: –

a). the nature of the consortium’s activities;

b). features of the Mobile Money service program;

vs). security elements of the system to be put in place;

D). a 3-year financial projection for the company;

e). transaction and other costs that will be borne by customers;

F). the profit-sharing agreement between the parties;

g). a schematic illustration of the schema’s transaction flows.

– The consortium’s IT (information technology) policy (you should consult your lawyer on the required elements of an IT policy under the guidelines).

– The scheme’s corporate management framework.

– The scheme’s emergency and disaster recovery plan (business continuity programme).

– Draft agreements with:-

a). technical partners;

b). participating banks;

vs). change company;

D). merchants;

e). telecommunications companies;

F). any other part.

– A 3-year tax clearance certificate from each part of the consortium.

– A project deployment plan (time, place and operation).

– Payment of 100 thousand Naira non-refundable application fee to CBN via RTGS third party transfer.

– Evidence of a shareholder fund of N2 billion.

Conclusion:- The introduction of the CBN guidelines on mobile money services has helped to streamline the operation of mobile money services while ensuring industry-wide participation and emphasizing the security of mobile money data. the end user and the efficiency of the services. While it is imperative that the guidelines are constantly reviewed, particularly in terms of minimum shareholder fund requirements, they remain a very good example of CBN keeping pace with the increasingly cross-border and intangible nature of financial transactions. person to person in Nigeria. . A better understanding of the Guidelines will require further consultation with your legal counsel.