NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
2.4 Variations Between the Regulation of Fintech and Legacy Players In Nigeria, there is generally no difference between the regulation of fintech industry par - ticipants and the regulation of legacy financial institutions. Fintech companies generally operate within the existing regulatory regime for the financial services industry. This is evident from the provi - sions of BOFIA, which explicitly recognise PSPs and IMTOs as financial institutions to be regu - lated as per other financial institutions (such as finance companies, which are legacy players) in the manner provided for by BOFIA. Also, legacy players are developing products to compete with fintech companies, thereby obscuring the regulatory lines. 2.5 Regulatory Sandbox In 2019, a Financial Industry Sandbox launched by the Financial Service Innovators Association of Nigeria in conjunction with the CBN and the Nigeria Inter-Bank Settlement System (NIBSS) was designed to allow fintech companies to test solutions and products within a controlled environment through the NIBSS Application Programming Interface (API) and those of other existing companies (the “Sandbox” ). The Regulatory Incubation Programme intro - duced by the SEC targets individuals and busi - nesses (registered, or intending to register, with the SEC) planning to launch an innovative prod - uct or process in the Nigerian capital market. Such innovators are expected to complete the fintech assessment form that can be accessed through the Innovation and FinTech Portal on the SEC website. Similarly, as discussed earlier, the SEC further introduced the ARIP as an interim sandbox for VASPs, announced the first cohort into the ARIP, and indicated that the next cohort
begun to acquire MFB licences to deliver their products. Financial Services Through Telecommunications Infrastructure In addition to the foregoing, under the Licence Framework for Value Added Services, the Nige - rian Communications Commission (NCC) is responsible for the regulation of businesses that offer financial services by leveraging mobile phones or other telecommunications infrastruc - ture. 2.3 Compensation Models The compensation models for the industry par - ticipants vary depending on the business model. For payment services, the compensation model is highly regulated in Nigeria. Companies in this subsector profit by receiving a percentage of the transaction fees that are typically incurred when making payments. In this regard, the Elec - tronic Payment Guidelines provide that fees and charges for web transactions are to be agreed between service providers and banks/entities to which the services are being provided. They also provide that the maximum total fee that a merchant can be charged for web transactions will be subject to negotiations between the mer - chant and the acquirer (the bank that maintains the merchant bank’s account). These negotia - tions must take into account the provisions of the CBN Circular on the Implementation of Inter - change Fee (the “Interchange Guidelines” ). The Interchange Guidelines regulate the interchange fees paid by the acquirers to card issuers (the financial institution that issues credit/debit cards to customers). For online lending, the Money Lender laws of various states prescribe limitations on the inter - est on loans that money lenders may impose.
566 CHAMBERS.COM
Powered by FlippingBook