Flutterwave granted Switching and Processing license by CBN amidst regulatory challenges
FinTech firm now licensed to process payments without intermediaries.
African FinTech company Flutterwave Inc., in a statement released by the company, obtained a switching and Processing License from the Central Bank of Nigeria, CBN. Seeking to expand across the region, acquiring the license is great news for the company as it facilitates transactions between financial service providers, merchants, customers, and other stakeholders.
According to an emailed statement released on Thursday, September 1, the license enables Flutterwave to process fund transfers between banks and fintech companies, handle card transactions, participate in agency banking and engage in other payment services without an intermediary.
Flutterwave formerly had Payment Solution Service Provider (PSSP), and International Money Transfer Operator (IMTO) licenses in Nigeria. While the PSSP license enabled customers to pay merchants and the IMTO license allowed it to power cross-border payments, Flutterwave still had to rely on agreements with other partners to complete these transactions. It wants to modify this and do transactions directly.
Flutterwave has now joined the league of FinTech companies with the switching license from Interswitch (an Africa-oriented technology-driven company focused on payments), eTranzact, Unified Payments, Appzone, TeamApt, amongst others.
This license, according to Flutterwave, will enable it to process transactions quicker, create new and enhance existing products, and improve banking services.
A part of the company’s blog as regards the announcement reads;
“A switching and processing license is CBN’s most desirable payment license because it embeds the licensee at the core of Nigeria’s financial ecosystem. This comes with rigorous and tough checks across every single part of the business’s operations. By virtue of being granted this license, we have demonstrated the highest level of security standards and processes in Nigeria,”
The company’s chief regulatory and government affairs officer, Oluwabankole Falade, acknowledging the rigorous process of acquiring the license, said; “We’re thrilled to have been issued this license after fulfilling all of the regulatory requirements. The application process was very rigorous and included a detailed review of our operations as a business,”.
The license will not immediately make Flutterwave powerful as Nigeria’s payment permits are designed to prohibit any one firm from participating in too many events at once.
According to the CBN’s instructions, Flutterwave may not be able to provide payment cards in the event of a switching license. Furthermore, the startup will find it difficult to unseat the 20-year-old Interswitch and other heavyweights currently in the payments switching control room.
The license comes after Flutterwave prepares for an initial public offering on the Nasdaq stock exchange, the second largest stock exchange in the world while dealing with allegations of financial misconduct, including allegations of money laundering in Kenya and irregularities related to stock options and bullying of employees in Nigeria, its largest market.