How to Apply for Authorization Letter to Engage in Mobile Phone Money Services in Kenya

Procedure

A Mobile phone company seeking to be authorised as a payment service provider should apply in writing to the Central Bank of Kenya (CBK) for an authorization. The CBK may, within thirty days of receiving an application request for additional information from the applicant if the information submitted is not complete or if the CBK considers it necessary.Stage 1. Approval of NameA. Company Name Approval

I. Contact the Central Bank of Kenya at an early stage for a preliminary meeting to discuss authorisation requirements and related issues.
II. Submit to the Central Bank of Kenya at least three (3) proposed names in order of preference.
III. The applicant will reserve the acceptable name with the Registrar of companies.
IV. Any name approved by the Bank shall not be used for any purpose unless and until the Bank has granted the applicant an authorisation.
V. The name approved is valid for 12 months from the date approval is granted by the Central Bank within which the applicant should have received an authorization to carry out payment service businessB. Product Name Approval

I. Submit to the Central Bank of Kenya the proposed product name in order of subject to any intellectual property rights that may be in existence but unknown to the Bank.
II. Any name approved by the Bank shall not be used for any purpose unless and until the Bank has granted the applicant an authorisation.Stage 2. Application for Authorisation

  • Complete and submit a certified Application Form 1to CBK accompanied by all supporting documents, including;
  • Certified copy of the Certificate of Incorporation and the memorandum and articles of association indicating core capital as per the First Schedule.
  • Certified copy of the Tax Personal Identification Number (PIN) Certificate
  • Certified copy of valid license from the Communication Commission of Kenya.
  • Certified copy of the management agreement where a custodial Trust relationship exists with the mobile payment service provider.
  • The type of services to be offered as well as the program of operations to offer these services.
  • A business plan (with details as specified in Annex 1 of the First Schedule) including an indicative budget for the first three financial years which demonstrates that the applicant is able to operate efficiently and safely. Submit the business plan covering the following but not limited to;

i. Background
ii. Governance structure including ownership;
iii. Audited financial statements for at least three years;
iv. Identity of directors and persons responsible for the management of the payment service provider, the custodial trustee.
v. Proposed structure and internal controls
vi. The proposed Risk Management Policies and Procedures and internal systems manual, and
vii. Legal and regulatory compliance function.
vi. a description of-

  • the governance arrangements of the applicant and internal control mechanisms, including administrative, risk management and accounting procedures, which demonstrates that these governance arrangements, control mechanisms and procedures are proportionate, appropriate, sound and adequate;
  • the internal control mechanisms which the applicant has established to comply with its anti-money laundering obligations as set out in the Proceeds of Crime and Anti-Money Laundering Act, the Prevention of Terrorism Act and the relevant Regulations and guidelines;
  • the structural organisation of the applicant including, where applicable, its intended use of agents, cash merchants, branches and outsourcing arrangements, and its participation in a national or international payment

(b) Description of how the payment service provider shall settle the payment obligations arising from its provision of electronic retail transfers;
(c) Verified official notification of the companys registered place of business, including the prospective places of business (Head Office, branches, agency and outlets, if any)
(d) Terms and conditions that will apply to its customers, agents and cash merchants;
(e) Current tax compliance certificate from the Kenya Revenue Authority;
(f) Latest report from the Credit Reference Bureau;
(g) Where the applicant is a subsidiary of a foreign company, a letter of no objection from the home regulatory authority recommending them to establish a payment system in Kenya should be obtained;
(h) Provide evidence that the payment service provider holds the initial capital set out in the First Schedule;
i. Evidence should be reflected in a bank statement of a licensed bank or microfinance institution indicating the isolated funds and/or Government of Kenya Treasury Bills and Bonds not under lien
ii. Evidence should either be in the name of the company and/ or the promoters/ shareholders of the company
iii. The promoters/ shareholders should give the Central Bank authority to verify the authenticity of the bank statement directly from the bank or microfinance institution.
iv. The promoters/ shareholders should provide the distribution or allocation (ultimate beneficiaries, citizenship, amount and percentage) of core capital to each individual promoter/ shareholder and/ or company, indicating significant shareholders/ promoters (owning at least 5% of the share capital)
(i) Pay a non-refundable application fee of Kshs. 5,000 to the Central Bank by Bankers cheque or by such other mode of payment as the Central Bank may prescribe.
(j) Any other documents or information as the Bank may require.
(k) Duly completed and submit the Fit and Proper Forms for all significant shareholders, Trustees, Directors and Managers in control of payment service provider.Stage 3. Authorisation

Upon assessment and fulfillment of all the requirements in stage two, and three;
i. Where the Central Bank is satisfied that the applicant has met all the application requirements, the Bank shall within seven days of receipt of authorization fees, issue an authorization permitting the applicant to commence business of payment services.
ii. Where the Bank rejects an application for authorization, the Bank shall communicate the reasons for its decision to the applicant within seven days.
iv. The Bank may, where the Bank rejects an application impose conditions to be complied with by the applicant before the applicant can re-submit the application for consideration.
v. The Bank may approve an application which has previously been rejected, if the Bank is satisfied that the applicant has complied with all conditions imposed.Ads by Google

Required Documents

  • Certified copy of the Certificate of Incorporation and the memorandum and articles of association indicating core capital as per the First Schedule.
  • Certified copy of the Tax Perso

Eligibility

Mobile phone companies

Instructions

To qualify for authorisation, your firm will need to seek approval from the Central Bank of Kenya and must meet all the conditions listed in National Payment System Act, 2011 and the NPS Regulations, 2014. You will need to give the Central Bank of Kenya, detailed information about proposed services as listed in the A-Z of the authorisation matrix, including, among other things:

  • details of the payment services business you will conduct.
  • the governance arrangements and internal procedures in place.
  • how you will meet the capital requirements.
  • details of the individuals responsible for the management of the proposed payment service provider.

If your firm meets these conditions and wants to apply, please fill out the Application for authorisation as set out in the NPS Regulations, 2014 in Form 1 as set out in the First and Second Schedules.

Required Information

  • Name of the company
  • Background
  • Governance structure including ownership;
  • Audited financial statements for at least three years;
  • Identity of directors and persons responsible for the management of the payment service provider, the custodial trustee.
  • Proposed structure and internal controls
  • The proposed Risk Management Policies and Procedures and internal systems manual, and
  • Legal and regulatory compliance function.

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Need for the Document

The mobile phone money transfer operators are authorized as Payment Service Providers by the Central Bank of Kenya. Payment Service Providers are defined as:

  • a person, company or organisation acting as provider in relation to sending, receiving, storing or processing of payments or the provision of other services in relation to payment services through any electronic system;
  • a person, company or organisation which owns, possesses, operates, manages or controls a public switched network for the provision of payment services; or
  • any other person, company or organisation that processes or stores data on behalf of such payment service providers or users of such payment services.

The mobile financial services industry has grown significantly over the past years since inception in 2007. The growth and viability of these services relies heavily on the existence of a payment platform that is convenient, easy to use, traceable and secure. The emergence of innovative mobile phone money transfers has put Kenya on the worlds payment system map. It is notable that the mobile-based money financial services have greatly enhanced access to financial services, which is one of the key objectives of the Government towards meeting vision 2030 objectives.

In particular, mobile phone money transfer platforms have moved from the traditional role of transferring money to provision of banking services to both banked and unbanked. Commercial banks have partnered with mobile network operators to enable customers to access their bank accounts through mobile phones. Mobile phones can be used for opening and operating virtual bank accounts and access of traditional banking services like depositing, withdrawing and credit facilities without physical representation to the bank.

About the Author

Sande Kennedy is the founder and Editor in Chief of SandeKennedy.co.ke & Kenyans247.co.ke He is a Kenyan-based Internetprenuer,blogger Political Activist & informer who has an interest in politics, governance, corporate-fraud and human-interest. Kindly drop me a note if you feel aggrieved on any matter that you would want to be highlighted  Twitter: @nyosake , Instagram: @itssandekennedy WhatsApp: +254791890826 Read More about me here