MTN's MoMo Bank Moves to Rake in New Merchants, Asks Customers to Open Accounts Using Old Naira Notes
- Africa's largest mobile network, MTN, is moving to increase its customer base for its Payment Service Bank, MoMo
- The bank is working to increase its mobile merchants by 224,000 in 2023
- The move follows the adoption of a cashless economy by the Central Bank of Nigeria
Nigeria is in the middle of a cash crisis due to efforts by the Central Bank of Nigeria (CBN) to demonetize the economy.
The current cash crisis has caused a boom in technology adoption, especially in fintech transactions.
Source: Facebook
The beneficiaries of the current cash crunch are mobile money operators and fintech companies such as MTN and Airtel.
The absence of physical cash in circulation has provided enormous motivation for the adoption of digital financial services as consumers are forced to adopt digital platforms and methods such as Point of Sale (PoS)
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Nigeria's Inter-Bank Settlement System data indicates a surge in e-payment adoption at PoS centers.
In January 2023, there was an uptick in the volume of transactions carried out by PoS operators and via PoS devices, reaching about N807.2 billion, 40% higher than the same month in 2022.
The increase in e-payment adoption provides a positive development for mobile money operators in Nigeria.
The CBN awarded Nigeria's mobile money operators a Payment Service Bank (PSB) license in the second quarter of last year.
The operators participated in Nigeria's mobile financial services market via indirect means. The move has prevented them from taking advantage of the increasing digital transformation shift.
The recent cash crunch provides new impetus to the growing mobile money operations.
Nigeria's largest mobile money operator, Mtn, is trying to expand its mobile wallet platform, Momo, quickly.
BusinessInsider reports that to increase adoption, the telecom company is deploying about 224,000 new merchants nationwide in addition to the existing one million active merchants. The move will encourage consumers to open Momo wallets using old naira notes.
In its Q3 report in 2022, the company reported that there were 1.8 million active Momo wallets, about 9.9 million registered accounts, and 188,000 active agents.
The momentum behind CBN's decision to swap higher naira notes was to reduce money in circulation, control liquidity and inflation, and simulate the move to a cashless economy.
The CBN also has limited cash withdrawal across the counter, enforced withdrawal charges of 3% for individuals and 5% for businesses, pushing towards digital money.
CBN hopes that the increasing use of e-payments will boost the number of Nigerians within the financial system and reduce the country's over-reliance on cash.
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Recall that Legit.ng reported that In October, Globacom, operator of the Glo telecom, launched its Payment Service Bank known as MoneyMaster to join other existing payment service banks such as Hope PSBank, 9PSB, owned by 9Mobile, MTN Momo PSB and Airtel’s SmartCash PSB.
The Central bank of Nigeria said the major objective of giving PSB licences is to boost financial inclusion, especially in rural areas, by increasing access to deposit and payment/remittance services to small businesses, low-income earners and households and others via high-volume low-volume transactions in a secured technology-driven atmosphere.
Enhancing Financial Innovation and Access report shows that about 38 million adult Nigerians, 36% of the entire adult population are without bank accounts.
Source: Legit.ng
