RoutePay products and services are omnichannel—available across all channels of payment, including the web, mobile, POS, ATM, USSD, etc. It also has an array of products and services targeting different market segments based on demography, inclinations, and leanings.

With this full approval, Routepay is certified to have met all of the CBN’s requirements.

“We are pleased to inform you that the CBN has approved the issuance of a license to operate under the Payment Solution Service Provider (PSSP) in Nigeria,” the apex bank said in a letter to RoutePay titled “Payment Solution Service Licence Category” and dated January 12, 2023.

The CBN approval came after a thorough review and update, including an on-the-spot assessment of the fintech firm’s facilities to ensure that it met developments in the payment ecosystem. Last year, the CBN granted RoutePay Approval In Principle (AIP).

RoutePay is managed by a team of astute professionals with deep knowledge and understanding of Nigeria’s digital payment systems, according to Mr. Femi Adeoti (group managing director and former managing director of Inlaks). “The CBN approval validates the firm’s trustworthiness in the financial services industry,” Adeoti said.

Adeoti stated that Routepay is poised to ensure that “digital payment solutions are made possible and available in our environment without hassles,” citing the growing need for improved processes, services, products, and accessibility in the digital payment and financial technology industries.

Speaking about the approval, Routepay’s CEO, Abayomi Olomu, stated that the company is very intentional about driving digital payment transformation in a changing and demanding world. He goes on to say that the organization’s diverse products will strengthen connections between parties in the payment space by focusing on eliminating pain points and improving customer satisfaction.

According to him, pain points range from issues of channel reliability to specific issues of trust; he explains that some people will still refuse to use their cards for online payments due to concerns about fraud, etc., while others are concerned about the cost of using payment channels.

This, he said, could be partly responsible for the low rate of adoption despite all the awareness, products, services, government policies, and investment in this sector. According to him, in spite of the number of service providers in the financial technology and digital payments space, more than 85 percent of transactions are still done via cash.

“All these concerns and many others are what we have termed as pain points and RoutePay is all out to fix them in very innovative ways. We are deploying an intelligent customer experience survey system to capture feedback from users from time to time so as to constantly adjust our services, processes, and products to meet the users’ expectations.

“We are making digital payment products and services available to all and sundry regardless of their exposure, technology awareness, location, age, affluence, and education.

While traditional banks still have a lot of ground to cover on how to solve the problem of financial inclusion, Africa is increasingly relying on digital and mobile services.

At the latest Monetary Policy Committee (MPC) retreat held in Lagos, Godwin Emefiele, the governor of the Central Bank of Nigeria emphasized the need to rethink financial sys­tem regulation, supervision and monetary policy imple­mentation in the country.  

He added that while post-COVID growth recovery in Nigeria can be adjudged to be moderate and stable, “we have seen a ma­jor change in the key sectoral drivers of that stable growth phenomenon, including the services sector, modernized agriculture, and manufactur­ing, suggesting that technolo­gy and innovation are playing a major role in output growth and economic development in Nigeria”.

This is important because it reiterates the regulator’s position on the importance of the regulation of the fintech sector, especially emerging frontiers like digital assets and cryptocurrencies.

In 2017, the CBN had earlier warned that cryptocurrencies were not legal tender and that investors were unprotected. In a circular dated February 5, 2021 (the “CBN letter”), the CBN had directed all regulated operators to desist from transacting in and with entities dealing in cryptocurrency.

In October of the same year, The Central Bank then went on to launch a digital currency with officials of the apex bank saying it would allow for financial inclusion and fiscal benefits to boost the economy.

The eNaira was therefore launched as part of the CBN’s cashless policy to improve cross-border trade, expand access to financial services, increase remittances from a large diaspora base and ultimately boost the country’s economy.

With emerging new asset classes such as Non-Fungible Tokens (NFTs) and Decentralized Finance (DeFi) built on Blockchain technology, it is clear that digital currencies are the next evolution of the financial technology ecosystem.

How can this impact the evolution of fintech in Nigeria? What are the benefits of building a structured and regulated ecosystem that’s open for innovation and collaboration between traditional institutions and new operators?

Regulatory Frameworks Will Ensure Certainty and Consistency In Policy Development

The Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and developing economies propelled by some key reforms by the different regulatory bodies.

The regulatory developments for the Nigerian fintech market have contributed to the ecosystem’s growth as they have demonstrated a commitment to creating an enabling environment that will support innovation in financial services, without compromising stability within the overall financial system.

Nigeria is also spearheading the adoption of CBDCs in Africa with the launch of the eNaira while the Securities and Exchange Commission also issued new digital asset regulations in May 2022.

In April, The Nigerian Communications Commission held a workshop in collaboration with the Bureau of Public Service Reforms (BPSR) and stakeholders, where it was concluded that Blockchain could be a bedrock of economic innovation and growth through effective implementation of policies and regulations.

Although we can still expect some policy harmonization as to how regulated entities will engage, it is clear that Nigeria is taking advantage of digital economy frameworks and regulatory initiatives that enables emerging technologies in the country. This is important because a regulatory environment clear about its goals will ensure that policymakers are always in alignment.

Driving Inclusion By Encouraging Innovation

The advent of blockchain technology has enabled digital records to be stored in a form that is even more permanent than physical records.

Blockchain technology stores numerous copies of the same records across multiple computer systems in a manner that is completely tamper-proof. This makes records on the blockchain less likely to be destroyed than physical ones.

This has created a situation where digital records are increasingly being more trusted and reliable than physical equivalents.

As the evolution of the financial system continues, the topic of decentralization will go hand in hand with it. It is inevitable because the conversation about how to ensure built-in transparency & accountability in the relationship between companies and citizens isn’t stopping anytime soon. Blockchain technologies are the future and will play a role in strengthening both the public and private sectors.

The application of blockchain technology in the Nigerian financial services industry is gradually gaining traction as industry players are now utilizing it in their service delivery. 

Notably, in 2021, Appzone, a Nigerian fintech software company, announced the launch of Zone, Africa’s first blockchain platform for payment processing that facilitates local and intra-African payments in fiat and digital currencies (we understand that a number of commercial banks in Nigeria are currently utilizing the company’s Zone product in processing the transactions of their customers).

HouseAfrica is another example of the revolutionary way through which blockchain technology is being applied to solve important challenges.

The company aims to develop intelligent and affordable homes while giving its investors maximum security of funds through the blockchain. In 2020, the company signed a partnership agreement with Nigeria Mortgage Refinance Company (NMRC) to deploy a digital/land property title authentication and verification system.

The system will make it possible for individuals and organizations – including financial institutions – to authenticate, validate or confirm the value of any property or land across Nigeria and ultimately improve the amount of mortgage financing transactions in Nigeria.

While blockchain technology is still generally unregulated in the Nigerian financial services industry, the adoption of blockchain technology via crypto-assets is now being regulated in certain respects. Pursuant to the 2020 SEC Statement on Crypto-Assets, crypto-assets are, by default, classified as securities unless proven otherwise. Consequently, the SEC also regulates crypto-token or crypto-coin investments when it is qualified as securities transactions. Well-defined regulatory policies like this will be key to further driving expansion and global adoption of digital assets while encouraging innovation in Africa.

Cross-Continental Economic Impact

Despite the rise of operators and stakeholders pushing for inclusive finance, the digital payment ecosystem across the continent – and indeed within most countries and regions – “is highly fragmented, without an overarching regulatory framework that can tie all the payment solutions together”.

Cross-border payments are often both costly and slow. This is due to a combination of conflicted regulatory coordination in many regions, and private sector actors in the instant payments landscape constantly pursuing short-term profits and market share over longer-term regional growth and inclusion agendas.

Coordination of regulation will mean greater interoperability of instant payments systems and would help promote peer-to-peer (P2P) interactions, small-scale trade, and cross-border e-commerce between African countries.

Conclusion

While no one can predict the future of fintech in Africa, what we do know is it requires a nontraditional regulatory approach—one as invested in the importance of experimentation and entrepreneurship as the practices it oversees.