The Central Bank of West African States (BCEAO) has issued an uncompromising directive to fintech operators in the West African Economic and Monetary Union (WAEMU): comply with licensing rules by May 1, 2025, or shut down.
The ultimatum, formalized in Notice №004–03–2025, follows a 15-month transitional period under Instruction №001–01–2024, which overhauled payment services regulation across the eight-nation bloc, comprising Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. With extensions exhausted, the BCEAO is now enforcing full compliance, signaling a pivotal shift in Francophone Africa’s fintech landscape.
The latest notice leaves no room for further extensions, signaling the regulator’s firm commitment to enforcing the licensing regime.
Key Provisions
The BCEAO’s framework imposes a structured regime on payment service providers (PSPs), electronic money issuers (EMIs), and fintech intermediaries. Below is a granular analysis of the requirements;
1. Licensing & Capital Requirements
Payment Institutions (PIs) must obtain BCEAO approval, with minimum capital thresholds scaling by activity:
- 10 million CFA francs (≈$16,500) for account aggregation services.
- 20 million CFA francs (≈$33,000) for payment initiation services (PISPs).
- 100 million CFA francs (≈$165,000) for wallet services, transfers, and merchant acquiring.
Electronic Money Institutions (EMIs) face similar capital demands but must also segregate customer funds.
Account Aggregators (e.g., financial data platforms) require registration, not full licensing.
Non-compliance means immediate cessation of operations.
Prerequisites for Approval/Registration (Articles 12–16, 22): Obtaining a license or registration involves demonstrating compliance with several prerequisites, including:
Corporate Structure
- Minimum Share Capital: As outlined above.
- Legal Form: Payment institutions must be incorporated as public limited companies, limited liability companies, or cooperatives.
- Registered Office: The entity must have its head office in a WAEMU member state.
Governance & Risk Management
- Fit-and-Proper Tests: Founders, directors, and major shareholders must prove integrity and financial capacity.
- Board Expertise: Mandatory skills in cybersecurity, AML, and payment systems.
- Operational Resilience: Firms must implement business continuity plans and annual security audits.
3. Consumer Safeguards
- Strong Customer Authentication (SCA): Dynamic two-factor authentication for transactions.
- Fraud Liability: PSPs must refund unauthorized transactions unless user negligence is proven.
- Transparency: Full fee disclosure pre-transaction; monthly statements required.
4. Data & Outsourcing Rules
- Local Data Storage: Transaction records must be retained within WAEMU.
- Third-Party Oversight: Outsourcing critical functions (e.g., cloud hosting) requires BCEAO notification and audits.
- Breach Reporting: Major incidents must be disclosed to regulators within 72 hours.
5. Activity Restrictions
- No Credit or Interest: PIs cannot lend or pay interest on user balances.
- No Check-Based Services: Transactions via checks, bills of exchange, or documentary credits are prohibited.
- Strict AML/CFT Compliance: Adherence to WAEMU’s anti-money laundering laws is non-negotiable.
Industry Impact
- Market Legitimacy: Licensed firms gain trust from banks, investors, and consumers.
- Regional Expansion: Harmonized rules ease cross-border operations.
- Investor Appeal: Clear regulations may attract venture capital and strategic partnerships.
The Imminent Deadline: Implications and Urgency
The BCEAO’s firm stance, as reiterated in Notice №004–03–2025, leaves no doubt about the consequences of non-compliance. As of May 1, 2025, any organization operating payment services without the necessary authorization will be compelled to halt its operations within the WAEMU. This has significant implications for Fintech startups that have not yet initiated or completed the licensing process.
The potential disruptions to business operations are substantial. Francophone West African fintech startups that fail to secure the required authorization risk:
- Forced Cessation of Operations: Leading to immediate revenue loss and potential business failure.
- Damage to Reputation: Operating without a license can severely impact the credibility and trustworthiness of a Fintech startup among partners, users, and investors.
- Legal and Financial Penalties: Non-compliance could potentially attract sanctions from the regulatory authorities.
