Read more about FinTech
Over the past few years in Nigeria, FinTech companies have experienced an explosion and the rippling effects are still felt today, only promising to expand further. A FinTech company is basically any business that uses technology to automate its financial services and processes. It’s in the name FinTech—a portmanteau of the terms Financial and Technology. The number of FinTech startups in Nigeria has seen a surge with at least 250 registered fintech companies. Young startups like Flutterwave and Paystack, and the relative old-timer Interswitch are among the top players in the industry. The industry is booming and interests in it keep rising, with over 40% of the population being young people, it’s not surprising; ease and convenience are one of the signatures of the new generation. So, how does one start a Fintech startup?
Choose A Niche
This is practically one of the most important steps to take when establishing a FinTech startup. It’s just like an author starting out a story; they have to pick a genre and stick with it. The same thing applies to a FinTech startup. There are three major niches in FinTech- Fund movement—which involves sending and receiving funds (remittances and payment solutions)
- Fund placement
- Data management
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Register Your Company
Once you’ve settled on a niche, you will have to register your company with CAC (Corporate Affairs Commission). It’s not just about picking a catchy name. The registration process is outlined on the CAC website.Licensing
FinTech companies are required to obtain a Payment Systems Providers (PSP) license from the central bank. This licensing regime was introduced in 2018 and is divided into three: Super, Standard, and Basic license. The Super License is a requirement for companies operating payment gateway platforms. To acquire this license, the fintech company has to have a minimum shareholder fund ranging from $275,00-$14 million [N113 million-N5 billion] and pay a licensing fee of N1-2 million each year, for three years. The Standard License is a requirement for companies operating wallet creation and management, e-money issuers, etc. The FinTech companies operating with this license will be required to maintain a shareholder fund of at least N3 billion, paying a licensing fee that ranges from N1 million to N500,000. Finally, FinTech companies have the option of getting the Basic License. This is a requirement for companies looking to operate either Point Of Sale (POS) or terminal services, and also for those providing payment processing gateways and solutions. With a minimum shareholder requirement of N100 million, and a licensing fee that ranges from N100,000-N50,000. These may seem like enough hindrances, but that is where perseverance and consistency come in. FinTech companies are the future, with traditional banks now embracing and integrating with them. With the right amount of funding and dedication—and a promise of innovation, because the industry evolves each day—your FinTech company could be right among the top players making payment a breeze in Nigeria. Featured Image Source: EntrepreneurGot a suggestion? Contact us: editor@connectnigeria.com
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