Have you been thinking of launching a business as a Payment Service Provider (PSP) in Ghana? Are you wondering what the requirements and processes will be; how quick and how easy? This article will give you the necessary information required to launch your PSP or FINTECH (financial technology) business in Ghana.
E-commerce is globally soaring and this trend is expected to continue. People can now order goods and services online and use same medium to make payments enabled by fintech. Thus, the world of business is changing gradually to adapt to the changes and development in technology. The emergence of COVID-19 especially has revealed the importance of e-commerce.
Therefore, the services of PSP companies enable companies and individuals to transact business across the globe with ease. Banks rely on PSPs to service their clients wherever they may be by using online payment apps and platforms, remittance or money transfer products, ATMs, visa cards, debit cards and master cards, etc. Also, telecommunication companies work with PSPs to integrate mobile payment solutions to enhance the speed of transactions.
Who Issues PSP licenses?
In Ghana, Payment Service Provider (abbreviated as PSP) licenses are regulated and issued by the Bank of Ghana (BOG) under the Payment Systems and Services Act 2019 (Act 987). One of the functions of BOG is to promote the safety and soundness of all payment, clearing and settlement systems. A company is not supposed to operate any payment service platform without a valid license from BOG. The enactment of the Payment Systems and Services Act, 2019 (Act 987) provides the legal and regulatory framework for the orderly development of the payment system.
What is a Payment Service Provider?
A PSP provides online services for accepting electronic payments through a variety of payment methods including credit card, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking. It is typically operated via a software platform commonly.
The range of services includes dedicated electronic money issuers, payment service providers (PSPs), closed-loop payment products, payment support solutions, and other emerging forms of payment delivered by non-bank entities.
What are the types of Payment Service Provider license and Permissible Activities for a FINTECH?
There are five (5) main classifications of PSP or FINTECH licenses in Ghana. Each PSP license allows a company to carry out specified permissible activities. If a company carries on an activity that falls outside the permissible activities, it would be in default and will be liable to a fine by the BOG. However, when a company holds a higher category of license like an Electronic Money Issuer, the company may undertake activities of the other lower category of licenses but not vice-versa.
The table below shows the categories of licensing and the permissible activities.
|S/N||TYPE OF LICENCE||PERMISSIBLE ACTIVITIES|
|1||DEDICATED ELECTRONIC AND ELECTRONIC MONEY ISSUERS||• Recruitment and management of agents|
• Creation and management of wallet
• P2P On Net/ Off Net
• Cash-in and cash-out
• Wallet based domestic money transfers including transfers to and from bank accounts
• Investment, savings, credit, insurance and pension products (ONLY in partnership with banks and duly regulated institutions)
• Mobile money merchant acquiring
• Termination of inbound International Money Transfer
|2||PAYMENT SERVICE PROVIDER – SCHEME||• Domestic Card Brand Associations e.g. Gh-Link|
• Switching & routing of payment transactions and instructions
|3||PAYMENT SERVICE – ENHANCED||All permissible activities for PSP – medium license|
• Marketplace for financial services offered by duly regulated financial service providers
• Merchant acquiring and merchant aggregation
• Payment processing
• Printing and personalization of EMV Cards
• Inward international remittances services
• Provide 3rd party payment gateway services
• Limited use closed loop virtual cards (funded via refunds, rewards & user’s other accounts)
|4||PAYMENT SERVICE PROVIDER – MEDIUM||Connects to an Enhanced PSP to offer the following services:|
• All permissible activities for PSP- Standard license
• Payment aggregation which is connected to Enhanced PSP
• Biller/Merchant Aggregation
• POS deployment
• Printing of non-cash payment instruments e.g. cheques
• Mobile payment Apps (with liability shift)
|5||PAYMENT SERVICE PROVIDER – STANDARD||Connects to an Enhanced PSP to offer the following services: • Mobile payment Apps (Liability shift on PSP enhanced)|
What are the applicable Payment Service Provider license fees?
The fee schedule below details the processing, license and renewal fees.
|1||DEDICATED ELECTRONIC MONEY ISSUER|
|5||PSP (STANDARD)||NO CAPITAL REQUIRED||500||1,000||200||5 YEARS|
What are the key requirements for obtaining a Payment Service Provider License for a FINTECH?
1. Integrity Capital / Minimum Capital Requirements
There are specific minimum capital requirements or integrity capital for each of the classes of the PSP licenses. Similarly, the GIPC Act 865 equally has minimum capital requirement for businesses with foreign ownership participation. If the entity applying for the PSP license also has foreign ownership, then the company will be required to comply with whichever is highest.
This implies that, sticking to only the minimum capital requirement from Ghana Investment Promotion Centre (GIPC) (for company registered with foreign participation) may not suffice for some of the categories of licenses. It is very important to consider the applicable BOG capital requirements even before the business registration, either than that, you may be required to amend the capital (increase in capital duly filed with the Registrar of companies) before proceeding with the application.
It is as detailed below;
|1||DEDICATED ELECTRONIC MONEY ISSUER|
|5||PSP (STANDARD)||NO CAPITAL REQUIRED|
Please take note that the Integrity Capital listed above is required to be deposited with BOG from the time of operation till the company ceases operation, winds up, etc. The Company cannot touch this money as long as it is still in operation. The funds however plus any accrued interest shall be released to the client upon winding up less any liabilities if any.
Also note that during the business registration, the Stated Capital is supposed to be higher than the Integrity Capital so that the balance could be used for the day-to-day running of the company. This extra capital to be used for working capital, is to be decided by the company.
2. Share structure
To obtain any PSP license, the company is required to have a Joint Venture with a Ghanaian partner. This Ghanaian is supposed to hold at least 30% of the total shares of the company. Therefore, this means that a wholly foreign-owned company cannot apply for a PSP license in Ghana. If for any reason, the company was originally registered as a wholly foreign owned, then to proceed with Bank of Ghana for a PSP license, they need to restructure the shareholding holding structure. Similarly, if the company is already a joint venture but the percentage of shares held by the Ghanaian is not up to 30%, then there is the need to restructure the share to correspond with the PSP requirement.
Legally, any limited liability company is required by the Companies Act 2019 (Act 922) to have at least 2 directors with at least one of them being resident in Ghana. However, for companies applying for PSP license, they must meet the BOG requirement of having at least 3 directors and at least 2 of the directors should be resident in Ghana. The Chief Executive Officer of the company should be one the resident directors.
Who are the Key Management Directors?
The key management directors include;
- Chief Executive Officer (CEO)
- Technology and Systems Manager
- Compliance and Risk Manager
- Finance Manager
General Licensing Requirements for FINTECHS or Payment Service Providers
The requirements differ from one category to the other. However, the following are general requirements that cuts across all PSP licensing;
a. Information about the company:
- Application letter
- Company profile
- Overview of company; date of incorporation, registered address (including digital address), registration documents from RGD and synopsis of the services to be offered.
- Details of external auditors, accountants, and bankers and all third-party payment service providers
- Governance arrangement
- Profile of shareholders with respective percentages, nationality and copy of share certificates
- Attestation from a notary public confirming ultimate beneficial owner(s) with 10% or more
- Number and profile of Board of Directors and key management personnel
- Organizational structure
- Profile of promoters where applicable
- Business plan
- Covering business overview, market analysis, products and services to be offered including transactional limits, on-boarding process and fees or commissions to be charged where applicable
- Five years financial projections for the proposed business
- Systems and Technology
- Information, communication and technology systems to be deployed
- ICT Architecture diagram highlighting security and control
- ICT Policy Framework
- ICT security and control (including transaction monitoring tools, fraud monitoring and detection tools and at least 2 factor authentication)
- Business continuity programme (including disaster recovery plan)
- Data protection certificate
- ISO 27001-2013 and PCI DSS Certification and Certificate of Compliant where applicable
- EV-SSL Tool where applicable
- Enterprise risk management
- Risk and Mitigation Measures covering Operational,
Market, Liquidity, Fraud, Legal, Credit and Funding Risks
- Business Impact Assessment (BIA);
- Anti-Money Laundering / Combating the Financing of Terrorism (AML/CFT) Policy
- Consumer protection policy
- Regulations of incorporation requirement as detailed in the license requirement
- Submission of SLA with all partnering institutions
- Shareholders, directors and key management personnel to complete the personal questionnaire forms.
b. Personal Details
Director/shareholder/key management personnel
- Indicate your position
- Identification number
- Place of birth
- Date of birth
- Acquisition of nationality
- Previous nationality
- Country of permanent residence
- Mother’s name, date of birth, place of birth, hometown, nationality, occupation
- Father’s name, date of birth, place of birth, hometown, nationality, occupation
- Contact details
- Correspondence address (include digital address)
- Telephone number: office, facsimile and mobile
- Current residential address (include digital address); date and address
- List of all previous addresses for the last 3 years; date and address
- Educational history (include all certificates)
- Higher academic qualifications; Type of degree, Course, Name and address of institution, and Year obtained
- Professional qualification; membership number, professional qualification and year obtained
- Secondary Schools, College(s) and vocational schools; name and address of school, qualification and date
- Employment History (attach CV) – list present and all past occupations and employments (Date of employment, Employer (name, address and contacts), nature of business, position and description of duties)
- Shareholding information (for shareholders with shareholding of 5% and above)
- Total number of shares and percentages
- All Sources of funds used to purchase the shares
- Provide 2 Character referees (add professional and educational institution)
- Have you ever been or still a director or manager or company secretary of any other institution?
- Have you ever been;
- Convicted of any crime?
- Charged for an offence?
- Subject to a disciplinary enquiry?
- Censured, disciplined or criticized by any professional body to which you belong or have belonged?
- Suspended from any office or asked to resign?
- Dismissed from any office or barred from entry into any profession?
- Disqualified from acting as a director or from acting in management or company secretary?
- Adjudicated bankrupt by a court in any jurisdiction?
- Declared bankrupt or have any money judgements been made against you that has not been satisfied in full?
- In connection with the formation, management or ownership of a substantial interest in a body corporate, partnership etc. been convicted by a court for fraud, misfeasance or other misconduct.
- Has a body corporate, partnership or unincorporated institution with which you were associated as a director/manager or partner or company secretary been compulsorily wound up?
- With regards to any previous experience at an institution located anywhere in the world, have you ever:
- Been responsible in whole or in part for the institution experiencing loss
- Refused to make available for examination, books of accounts or records, or willfully furnished false information
- Obstructed or endeavoured to obstruct the proper performance by an auditor or inspection by the supervisory authority
- Had an intent to deceive, made false or misleading statements or entries, omitted statements or entries that should have been made, or altered, concealed, or destroyed any statements or entries in any book, record, account, document, report, or statement of the institution.
- Information on your bank(ers)
- A certified copy of a valid ID (passport for foreigners) and 3 passport pictures
Certified by a notary public (certifier’s signature, name, contact, profession, name and official stamp, and date
- Complete the net worth form for the shareholder(s)
Validity of license and renewals for FINTECHS
The validity period for any of the PSP licenses is 5 years. The fees to be paid during the renewal is indicated in the fee schedule above. Consequently, every 5 years the PSP license must be renewed.
Who is eligible?
- A body corporate regulated under the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) shall not engage in a payment service business unless that body corporate applies for authorization from Bank of Ghana to do so.
- Also, a person who is convicted of an offence shall immediately cease operations as a payment service provider.
What are the penalties for operating a FINTECH without a valid PSP license
Any company or individual found to be operating a PSP or FINTECH without a valid license commits an offense and will be liable to a fine.
- If an individual, he/she will be liable on summary conviction to a fine of not less than two thousand penalty units and not more than four thousand penalty units or to a term of imprisonment of not less than four years and not more than seven years, or to both.
- If a body corporate, the body corporate will be liable on summary conviction to a fine of not less than four thousand five hundred penalty units and not more than seven thousand penalty units.
How long does the process take to get the final license?
The duration is normally within a period of 6 months. However, delays may happen as a result of inadequate or insufficient information. Example of this includes; if the forms are not well completed, if the requirements are not met, if during their investigations they find some information to be untrue or the capital requirement is not met, among others.
Rejection and suspension of a payment service license
BOG has the mandate to reject an application or refuse to grant a license if the company does not meet the requirement.
In the same manner, BOG may suspend a person or body corporate from operating a PSP or FINTECH if they fail to meet the infrastructure and other requirements, or the affairs of the company is being conducted in a manner that is detrimental to the interest of the payment system, or the company is required to suspend its service under any other law.
FINTECH Players in Ghana
Financial Technology (FinTech) is a new technology that seeks to improve and automate the delivery and use of financial services in the world. The FinTech space is gaining momentum in Ghana. In Ghana for example, use of mobile money as a medium of payment has overtaken the issuance of cheques in 2021 (Jan – May 2021) by over GHS 243 billion. Remittance inflow into Ghana is soaring and this has led to the growth of the FINTECH space.
Some of the key players are;
|FINTECH||Type of Solutions / Services|
|Ghana Interbank Payment and Settlement Systems (GhiPSS||Government Agency – Management of payment system infrastructure for all financial institutions in Ghana to help them communicate and exchange Data.|
|PaySwitch||Provides integrated payment solutions to Commercial Banks, Non-Banking Financial Institutions and Telecommunication Networks for ease of payments.|
|iPay Solutions||Payment solutions – money transfer across Africa.|
|Express Pay||Visa Payment Technology Provider (PTP), Visa eCommerce Processor, enables international payments using MasterCard, Visa, Discover and American Express.|
|IT Consortium||Services in Mobile Banking, School Fees Payments, Mobile Teller, Debit Order, Caddles ATMs, Fidelity Y’ello Save, Foon and Pay.|
|Zeepay Ghana Limited||International remittance, domestic transfer, bill payment, and mobile money services.|
|Blue SPACE Africa||Services include; BlueCash, BlueHost, Blues, BlueTRX, BluePay, Blue Trade|
|Mazzuma||Mobile money payment system to facilitate money transfers across all networks as well as airtime purchase and bill payment options in Ghana. They sell MAZ tokens for global cross border and P2P payments etc.|
In summary, if you are a FINTECH or a Payment Service Provider seeking to invest in this field, then I believe these guidelines have been beneficial to you.
The processes even though appear quite long, if all the necessary information and requirements are prepared and submitted in the most appropriate manner, your process should go through without much stress.