The argument involving CBK and Flutterwave has again reignited the debate on the time it takes for fintechs to obtain operation licenses in Kenya.
According to CIO Africa, the new revelation by The Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge that Flutterwave and Chipper Cash are not registered and allowed to operate in the country got mixed reactions from the fintech society.
Further yielding its big stick, CBK directed banks and microfinance institutions in Kenya to stop dealing with two fintechs.
In a response to CBK pronouncements, Flutterwave said, “In 2019, as our operations grew, Flutterwave submitted its application for a payment service provider license. We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements, and we look forward to receiving our license.”
The exchange between CBK and the Nigerian company once again reignited the debate on the time it takes for fintechs, especially, foreign-owned to get operation licenses in Kenya.
Seedbed of fintech in Africa
Regarded as the seedbed of fintech in Africa because of the pioneering mobile money transfer service Mpesa, it is expected that fintech companies wouldn’t break a sweat trying to get operating licenses in Kenya. But there’s more to it.
Stephen Mwaura, Former Head, National Payments System, at CBK says there are no specific timeframes for the regulator to issue approval licenses to fintechs. Licenses are only issued after the applicants meet the licensing requirements of the CBK.
Mwaura also thinks the licensing approval problem lies with the fintech start-ups. He blames foreign fintechs eyeing the Kenyan market for failing to use the right strategies to get licensing approval, not offering services that have an impact on the local population, and engaging in unethical practices that dent their firm’s reputation which reduces their chances of getting licensed.
“Some of these fintechs are not registered in Kenya and you cannot just walk into a country and start doing business. Foreign fintechs must meet certain regulatory thresholds for them to be allowed to operate in Kenya. These include standards that protect consumers and safeguards against money laundering” he told CIO Africa.
Last month, Flutterwave was caught up in a money laundering scandal in Kenya that saw a court freeze $62 billion held in their accounts and some of their business associates. However, the Nigerian start-up denied claims of money laundering.
“Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this. We are a financial technology company that maintains the highest regulatory standards in our operations. Our anti-money laundering practices and operations are regularly audited by one of the big four firms. We remain proactive in our engagements with regulatory bodies to continue to stay compliant,” Flutterwave said in a statement at the time.
Local partnerships
Mwaura advised foreign fintechs to provide clarity on services that they are coming to offer in the country when applying for licensing.
“There is no clarity in some of what these foreign-owned fintechs are doing. Are they offering API integration, payment transfers, or what”? He added that the easiest way for foreign fintech to enter the Kenyan market is through partnering with local firms instead of rushing to secure licenses. He gave the example of global companies PayPal and VISA which have partnered with Kenya’s leading Safaricom to extend some of their services here.
Flutterwave says, on their website, “It provides a payment infrastructure for global merchants and payment service providers across the continent. On the other hand, Chipper Cash says it allows users to “move money across town, across Africa or an ocean”
Association of Fintech in Kenya (AFIK) on Wednesday called on collaboration between stakeholders noting that “the growth of the fintech industry in Kenya will be determined by the confidence which we can instill to innovators and investors”.
“Any move towards fintech regulation should focus on: Fostering innovation and the development of new products and services. Boosting financial inclusion while ensuring consumer confidence and trust in market participants. Encouraging competition by making the market accessible to new entrants. Maintaining stability in the market through right-touch regulatory oversight and supervision.” AFIK Chairman Ali Hussein said in a statement issued to newsrooms.
Digital Lenders Association of Kenya Board Chair Kevin Mutiso told CIO Africa that the body doesn’t “have any problem with the CBK because its member’s licensing requests are approved within 60 days of working”.
Flutterwave and Chipper Cash FAQs
Flutterwave
Here are the frequently asked questions about Flutterwave, according to the Flutterwave website:
What is Flutterwave Capital?
Flutterwave Capital enables businesses to access quick and affordable loans to augment the working capital required to grow their business, with no collateral required and easy reporting and monitoring right from their Flutterwave Dashboard
What are the requirements for using Flutterwave?
The requirements for using Flutterwave depend on the country and category of account you are signing up for. It may be in Nigeria, Ghana, Kenya, Uganda, South Africa, and so on.
What If you own a business, but do not have a certificate of incorporation?
You can start by creating an individual account. If you register your business in the future, send an email to hi@flutterwavego.com with a copy of your certificate of incorporation and corporate bank account details for your account to be upgraded to a business account.
What happens if you don’t submit these documents and bank account information?
Your account will be put on test mode and you will not be able to carry out transactions or receive payments via Flutterwave till you submit your documents and bank account information.
What do I need for a seamless verification process?
To ensure a seamless merchant onboarding process for you during registration and verification of your Flutterwave account, please note the following:
For business accounts, there must be a corresponding match between your Flutterwave business Name (Trading name) and the name registered on your business documents.
The business name must match the name on the corporate bank account details uploaded during registration.
The contact person’s name registered on your Flutterwave account must match the name on the valid ID uploaded.
Only the following are accepted as valid means of identification:
- International Passport
- Driver’s License
- National ID (NIN) Card.
Please note that the valid ID uploaded has to be the original colored copy and not duplicates (photocopy). The temporary (paper) NIN slip is not acceptable. For Driver’s License, please upload both sides (front & back) for verification.
For registered businesses, remember to input your CAC number where prompted.
Please ensure you have your valid ID with you for live capture as this would be required.
How much does it cost to create a Flutterwave account?
Nothing! You can create an account and set it up to receive payments on Flutterwave completely free. Flutterwave only charges fees per transaction on transfers and payments you receive.
Chipper Cash
Here are the frequently asked questions and their answers according to their website.
What is Chipper Cash?
We are a fast-growing Fintech company that offers several products and services such as:
- Instant no-fee local and cross-border money transfer
- Discounted airtime purchase
- Data bundle purchase
- Zero charges on bill payments
- Virtual Cards
- U.S. Stocks Trading
With over 4 million users, our focus is to bring Africa together, one transaction at a time.
Chipper Account Security
At Chipper Cash, your payment information and personal data are encrypted to protect you against unauthorized activities and provide a safe platform for sending and receiving cash.
Why should I use Chipper Cash?
What is different about Chipper Cash?
Our team is focused on creating the most pleasurable experience for friends, families, and businesses. We provide a uniquely transparent platform and communicate information as clearly as possible to the customer.
Simply send money to your friends, family, and associates’ Chipper Cash accounts and let them decide how they will withdraw or spend it – whether through mobile money or otherwise!
We are constantly improving our service and listening to customer feedback and considering it.
How do I verify my account?
How to verify your account and get higher transaction limits.
The Chipper ecosystem is a community built on trust, therefore to continue using your Chipper account, you will have to submit valid documentation to verify your account.
From 29th September 2020 ongoing, you will be unable to cash in, cash out or send/receive payments on Chipper if your account is not verified.
We recommend you go through this process using a strong and secure wi-fi connection to avoid interruptions. Please follow the clear, on-screen instructions at every stage in the process.
To verify your account, first, ensure your Chipper app is updated to the latest version by checking on the Playstore / Appstore.
So there you have it!
