The Federal Competition and Consumer Protection Commission (FCCPC) has revealed that numerous illegal Digital Money Lenders (DMLs), commonly known as loan apps, are utilizing wallets on Payment Solution Service Providers’ (PSSP) platforms to carry out their transactions. Despite the commission’s persistent efforts, the Chief Executive Officer, Mr. Babatunde Irukera, emphasized the challenge of halting the operations of these illegal loan apps.
Mr. Irukera explained that the modus operandi involves the DMLs conducting their operations online, and when their bank accounts face suspension, they seamlessly transition their transactions to wallets on PSSP platforms.
This revelation follows a recent directive from the Nigeria Interbank Settlement System Plc (NIBSS), instructing Nigerian banks to disengage non-deposit-taking financial entities, including PSSPs, from their Nigerian Interbank Payment (NIP) outward fund transfer channels.
Addressing allegations posted on X platform, accusing FCCPC officials of allowing illegal DMLs to persist due to alleged bribery, Mr. Irukera categorically refuted the claim, emphasizing the inherent challenge in completely halting the operations of these digital lenders. He asserted that the commission is actively engaged in addressing the complexities associated with curbing the activities of illegal loan apps.
No way to stop DMLs operating actually. They spring up daily in different places on the internet using APKs and when bank accounts are frozen, they operate by wallets through PSSPs.We are chasing every day,but won’t ever stop them all. Nothing to do with bribes please.
Mr. Irukera says
Who are the PSSPs?
A Payment Solution Service Provider (PSSP) license grants the licensee the authority to offer and manage payment processing gateways and portals, engage in solution/application development, and provide services related to merchant service aggregation and collections.
It’s important to note that a PSSP license does not confer the authorization to hold customers’ funds or create and issue wallets. PSSPs primarily consist of Financial Technology (FinTech) entities specializing in facilitating both online and offline payment solutions. Their services encompass collections, check-out processes, biller aggregation, and payout services.
As per the Central Bank of Nigeria (CBN), there are currently 75 companies holding PSSP licenses. Notable entities within this category include Flutterwave, Appzone, Eyowo Integrated Payments Limited, and Fincra Technologies Limited, among others.
Despite the FCCPC’s endeavors to legitimize the operations of loan apps through its registration framework, a significant number of digital lenders continue to operate unlawfully in the country. According to the Commission’s CEO, banning these illegal operations is deemed impossible, further emphasizing the challenges in fully curbing the activities of such entities.