NIGERIA – The Central Bank of Nigeria has approved the licence for MTN’s Mobile Money (MoMo) Payment Service Bank in the country, extending its services to wider banking operations.
Mobile money is a growing contributor to MTN Nigeria’s income, and the new banking licence would allow the company to explore growth opportunities presented by the country’s unbanked population.
MTN Group CEO Ralph Mupita said granting the final approval to commence the operations of MoMo bank was an “important milestone” for the company’s Ambition 2025 strategy unveiled a year ago. Nigeria, the continent’s populous nation, is MTN’s largest market.
Mobile money is an electronic service that enables users to send and receive money, make payments and perform other transactions using their mobile phones.
The system is used across a number of MTN’s African markets, including Zambia, Ghana, Cameroon, and the Democratic Republic of Congo.
In January MTN revealed that MTN Nigeria’s mobile money service had attracted 9.4 million active users since launching in August 2019, a growth the company said provided a “solid foundation” for the upcoming establishment of the bank.
The company says the bank will “provide a powerful platform to drive digital and financial inclusion in Nigeria”.
The volume of transactions performed through the service rose by 167% to 137.5 million in the 2021 full financial year.
Mobile communication companies are venturing into various fintech-based services to diversify their income, and banking services have been a key area of growth.
The primary goal of giving Payment Service Bank (PBS) licenses, according to the apex bank standards, is to increase financial inclusion, particularly in rural regions, and to make transactions easier.
PSBs are expected to operate in rural areas and in locations where Nigerians lack access to banking services.
In rural areas, they are also mandated to provide at least 50% physical points of entry (sometimes known as kiosks).
In several of their locations, PSBs may also have ATMs. Customers can withdraw cash as a result of this. A PSB and a traditional commercial bank share the ability to take customer deposits and invest a percentage of those amounts in short-term CBN or FG assets.
The key difference is that commercial bank banks are allowed to provide credit facilities, whereas PSBs are not. They can also move some of their excess funds to any commercial bank they want.
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