Nigerian payments company Interswitch, backed by Visa, has merged with M-Kudi, a provider of mobile money services.
This strategic move by Interswitch is a step towards securing a Payment Service Bank (PSB) license from the Central Bank of Nigeria (CBN).
Digging Deeper
Pending regulatory approval, this merger will enable Interswitch to establish accounts and handle customer deposits.
Interswitch’s decision falls in line with its recent acquisition of a mobile virtual telecommunications license.
Why This Matters
The acquisition of a PSB license will allow Interswitch to receive foreign currencies on behalf of its customers and provide agency banking services directly.
Zoom Out
In 2018, the CBN introduced regulations for payment service banks with a mandate to boost financial inclusion in rural areas. As per these regulations, license holders are required to undertake 25% of their physical operations in rural regions with a substantial unbanked populace.
Restrictions
There are some restrictions on the operations of mobile money operators. Operators are barred from engaging in several lucrative aspects of traditional banking, such as directly issuing loans, holding foreign currency deposits, or participating in foreign exchange transactions, with the sole exception of receiving remittances.
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