The Different flavors of the Payment Service Provider license around Africa.
THE LOGUE- An African –focused Fintech Newsletter | Vol 18 | April 10th 2023
Hello Fintech Fans,
You are about to read The LOGUE - a newsletter for professionals, investors, and enthusiasts who have limited time but need updates on African Fintech.
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These days no one is sure about the Fintech gist we hear. For example
Was Flutterwave hacked twice in March? 😔
Is Moniepoint Inc. trying to buy Payday?🙂
Has the AfriGo card scheme project hit a bottleneck?🤔
I’m not sure, and if my guess is correct, neither are you.
But I’m doubly sure that the top 8 news headlines from African Fintech are accurate. Take a look at the infographic below, and scroll down for more analysis.
🎯South African Fintechs are on a funding roll again. The last time we reported funding in that region, was in the last week of Feb when Naked raised their Series B fund.
Last week, Peach Payments and Paymenow raised a combined $45M for Series A and Debt Facility respectively. We wrote about Debt Facility in our last deep dive, it is good to see more funding from this category.
🎯Also from South Africa, we have an interesting Fintech Product innovation. Mukuru, a fintech focused on international transfers has launched a drive-thru service to provide a safe and convenient option for their customers in Zimbabwe.
The location runs from 7 a.m. to 7 p.m., and customers can walk in as well. To learn more about Mukuru’s growth, see the infographic below.
🎯 National Payment Switches are becoming a regular feature in our weekly updates. It might not be unrelated to the calls for unified currencies per region and inter-African money transfers. All these are reliant on robust Payment & RTGS systems.
Last week the Island of São Tomé and Príncipe made an appearance, signing a $3.2M loan from the AFDB to upgrade the country’s national switch payment system.
Also, EthSwitch, Ethiopia’s national payment switch partnered with Mastercard Partner To Drive Digital Payments using the Mastercard Send Platform.
Next up is the deep dive, let’s dive in 🏄🏽♂️.
Reviewing the Payments Service Provider License in Africa.
In this deep dive, we look at one of the most popular Fintech licenses in Africa - The Payments Service Provider License. In many African countries, the PSP license is required for fintechs that offer payment services, such as mobile money, e-wallets, and online payment platforms.
Without the license, fintechs may face regulatory fines, legal penalties, and reputational damage, which can hamper their growth and viability.
However, having a PSP license isn’t enough. In addition, fintechs in Africa must also comply with other regulatory requirements, such as data protection laws, consumer protection regulations, and anti-money laundering laws.
A payment service provider is often confused with a payment facilitator. The difference is that a PSP does not participate in merchant funding whilst a payment facilitator funds merchants directly.
The requirements for obtaining this license can vary from country to country, and failure to comply can result in serious consequences. Below we explore the different regulating bodies and licensing acts in the major Fintech countries in Africa.
Next we look at what the major requirement is per country, highlighting the minimum capital requirement and 5 major players in each country.
📌In Nigeria, the requirements for obtaining a Payment Service Provider (PSP) license are set by the Central Bank of Nigeria (CBN) and are subject to change. However, the following are some of the requirements for obtaining a PSP license in Nigeria:
Minimum Share Capital: The PSP must have a minimum paid-up capital of N100 million for National Operators and N50 million for Regional Operators.
The top 5 Fintechs with this license in Nigeria are Paystack, Flutterwave, Interswitch, Moniepoint and Remita.
📌In Kenya, the requirements for obtaining a Payment Service Provider (PSP) license are set by the Central Bank of Kenya (CBK) and are subject to change. However, the following are some of the requirements for obtaining a PSP license in Kenya:
Minimum Share Capital: The PSP must have a minimum paid-up capital of Ksh. 20 million for National Payment Service Providers and Ksh. 5 million for Regional Payment Service Providers.
The top 5 Fintechs with this license in Kenya are Cellulant, DPO Group, Interswitch, Pesapal and BitPesa.
📌To obtain a PSP license in South Africa, fintechs must meet several requirements. Firstly, they must have a minimum capital of ZAR 5 million, which is equivalent to approximately USD 340,000. Additionally, they must have robust systems and controls in place to manage financial risks and prevent money laundering and terrorist financing.
The top 5 Fintechs with this license in South Africa are Yoco, PayFast, i-Pay, Peach Payments and Ozow.
📌In Egypt, the requirements for obtaining a Payment Service Provider (PSP) license are set by the Central Bank of Egypt (CBE) and are subject to change. However, the following are some of the requirements for obtaining a PSP license in Egypt:
Minimum Share Capital: The PSP must have a minimum paid-up capital of EGP 5 million.
Some of the major players in the zone with this license are Fawry, PayMob, Halan, Khazna and Bee.
💡And there you have it, so if you want to get a license in any of these zones, you know how much you should have. If you also want to know how a market is doing wrt to the PSP license, take a look at the footprint of the 5 major players we have listed per country.
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