MTN Payment Service Bank received approval in principle last year
The Nigerian arm of Africa’s largest network operator, MTN Nigeria Communications Plc has received final approval from Nigeria’s central bank to commence operations of MTN Payment Service Bank, PSB in the country.
The final approval of the MTN payment service bank comes six months after the apex bank also granted approval in principle to Bharti Airtel’s Nigerian operations to operate PSBs.
The CBN had, at the time, disclosed that the approval was subject to the fulfilment of certain conditions within six months.
This announcement now shows that MTN has fulfilled all regulatory requirements for the PSB to have received the nod from the CBN.
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Based on this MTN Payment Service Bank Limited, known as Momo can now commence operations.
In a statement posted on the Nigerian Exchange Group and signed by MTN’s company’s secretary, Uto Ukpanah, MTN said, “We refer to our notification issued on 5 November 2021 in which we communicated receipt of the approval in principle from the CBN for Momo PSB.”
Nigeria’s central bank believes that the MTN payment service bank and other PSBs are to leverage mobile and digital channels to enhance financial inclusion and stimulate economic activities in rural areas through the provision of financial services.
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What this means
Although this is not equivalent to a conventional banking licence, it has far-reaching implications for the traditional financial services system as the payment service bank licence now allows MTN to receive deposits while their customers can also operate savings accounts.
In addition, their customers include individuals and small businesses, which puts MTN in direct competition with existing retail banks in the country, who depends on deposit volumes and transactions from individuals and small businesses to remain profitable.
What is more? With this nod of approval, MTN PSB can also facilitate cross border remittances using all the channels available within Nigeria, thereby shrinking the remittance market for the banks. Already, a number of fintech, such as Flutterwave’s Send have eaten into this market.
MTN Payment Service Bank can also issue debit, prepaid cards, and operate electronic purses. It can also invest some of the deposits they collect in bonds and Securities. This means the banks may just have to offer rates that are more competitive.