If you’re considering entering the payment service industry in Cameroon, securing a payment service license is a crucial step. This comprehensive guide explains what payment services are, who can provide them, the requirements for licensing, and the processes involved. Whether you’re a business owner, investor, or legal professional, this article provides the detailed
information you need.
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What is a Payment Service?
A payment service involves issuing, managing, or executing payment instruments or orders. According to Article 3 of Regulation No. 04/18/CEMAC/UMAC/COBAC, payment services in the Central African Economic and Monetary Community (CEMAC) include:
Cash deposits and withdrawals from bank accounts, including account management.
1. Execution of payment transactions such as:
A. Withdrawals, including authorized individual transactions.
B. Payment transactions using payment cards or similar devices.
C. Credit transfers (one-off or standing).
2. Provision and management of payment instruments.
3. Money transmission services without requiring payer or payee accounts.
4. Issuing and managing electronic money.
Who Can Provide Payment Services?
Payment services can only be offered by authorized Payment Service Providers (PSPs). These include:
A. Credit institutions.
B. Microfinance institutions.
C. Payment institutions licensed under CEMAC regulations.
In Cameroon, PSPs must obtain approval from the National Monetary Authority (Ministry of Finance), following the endorsement of the Central African Banking Commission (COBAC).
Conditions for Becoming a Payment Service Provider
To operate as a licensed PSP in Cameroon, applicants must meet several conditions:
Share Capital
A minimum share capital of 500 million CFA francs is required (Article 2 of COBAC Regulation R-2019/02).
Legal Form
The institution must be incorporated as a Public Limited Company (PLC) with a Board of Directors, as per Article 6 of Regulation 04/18/CEMAC.
Licensing Approval
A valid application must be submitted to obtain the necessary license.
Requirements for a Payment Service License Application
When applying for a payment service license, your submission must include:
1. Business Plan: Shareholder equity breakdown and five-year capital projections.
2. Corporate Documents: Articles of association and commercial name of the service.
3. Service Distribution: Details on payment service channels and associated domains.
4. Technical Details: Comprehensive descriptions of operational, security, and IT systems for payment services, including:
A. Functional diagrams.
B. Financial flow processes.
C. Fraud detection and crisis management plans.
D. Data protection measures.
- AML Compliance: Anti-money laundering systems and risk management processes.
- Regulatory Approvals: Authorization from the telecommunications regulatory body if the service involves numbering resources.
If the applicant’s headquarters are outside CEMAC, additional documentation such as approval from the banking authority in the home country is required.
Exclusions for Payment Institutions
Payment institutions are prohibited from:
A. Collecting deposits or offering interest on funds received.
B. Providing or managing currency instruments like promissory notes or bills of exchange.
C. Extending credit without meeting strict conditions.
Other Authorized Services for Payment Institutions
Payment institutions may offer additional services, including:
A. Investment in low-risk, liquid assets.
B. Foreign currency exchange into CFA francs.
C. Management of ATMs and payment terminals.
D. Custody and data processing for other payment service providers.
Penalties for Non-Compliance
Payment service providers face penalties, including:
A. License withdrawal for failure to operate within 12 months of approval.
B. Business inactivity for six months or more.
C. Non-compliance with licensing conditions or submitting false information.
Why Choose Prime Time Law Office for Assistance?
Navigating the licensing process for payment services in Cameroon can be complex. Prime Time Law Office provides:
A. Expert guidance on meeting CEMAC and COBAC regulations.
B. Tailored solutions for securing a payment service license.
C. Legal advice to ensure compliance and avoid penalties.
This information is intended for general guidance and informational purposes only. It is essential to consult with a qualified legal professional in Cameroon for specific advice and assistance.
To talk to a lawyer for legal assistance, Contact PRIME TIME LAW OFFICES