EXPLAINER: MTN Commences MoMo PSB Operation

'Tosin Adeoti
7 min readMay 21, 2022


A woman wakes up to go to the market in rural Southern Nigeria. She had used the remaining money on her to buy food for her children the previous day. That leaves her with nothing to take on her shopping trip. A man in urban Nigeria would seek a nearby ATM to withdraw funds using his card. However, where this woman lives, she has no such luxury. But no worries, she reaches for her phone, punches a code and requests for money. Some minutes later, she approaches a man holding a funny-looking device and collects cash from him — the money she requested earlier. She counts the money, verifies the number of the notes, and heads to the market.

This may sound like fiction to some people, but for many people, this is the primary way they bank in Nigeria right now — the world of mobile money banking.

There is a large number of unbanked people in Africa — generally, people who do not live near banks or have bank accounts. A whopping 66% of Africans are unbanked. Only 11% of Ugandans are banked. According to Vox, drawing data from Finclusion, it is 6% for Senegal. While it is higher in Nigeria at 64%, 36% of people unbanked comes to 38 million adults, higher than the population of Ghana, or Morocco, or Côte d’Ivoire, or more than the combination of the population of our neighbours, Chad and Benin.

Mobile money banking has come to the rescue. It started in Kenya in the early 2000s and was initially built off of text messaging, with no smartphones or apps required. While the pandemic accelerated the boom of mobile money with bank branches closed yet people needed to spend to stay alive, Nigeria has not experienced the same rapid rise in mobile money usage as its regional neighbours Ghana and Kenya, and it lags behind them in terms of penetration.

MTN to the Rescue

MTN Nigeria wants to change this. While Nigeria has the most mobile money services on the continent, there are a lot of challenges that MTN considers itself uniquely qualified to tackle. In analyzing challenges in the space, GSMA acknowledges Nigeria’s lack of infrastructure investment. MTN is positioned to solve this problem. MTN has extensive nationwide 2G and 3G network coverage of 90%. MTN has a large capital base, strong brand presence, technology, and ability to scale. You may recall in my December 2021 article about MTN’s share offer I mentioned that MTN received a provisional license to operate a Payment Service Bank (PSB) in Nigeria.

Last month, it received its final license. MTN is finally able to consolidate its offering to its biggest market. As the most valuable company in Nigeria, the results of MTN’s financial year ended December 2021 was even more impressive. It grew its service by 23%, its data revenue by 55% and its fintech revenue by 57%. Its 4G network now covers 70% of the population, up from 60% in December 2020. Truly impressive.

While there are companies already in this space, none has the pedigree and financial commitment of MTN. This license will increase competition, particularly among commercial banks and Fintechs. MTN Nigeria is no longer strictly a telecoms company. After meeting the minimum capital requirement of $12.2 million (N5 billion) for a PSB license, MTN is now a financial services company as well. Before venturing into Nigeria, MTN already operates mobile money services in other countries. Bloomberg reported that a third of MTN’s income in many markets could come from mobile money soon. MTN Group already derives 25% of its income in Uganda and 23% in Ghana through its mobile money service, MoMo. MTN Group CEO says the company plans to increase its fintech investment from about 8% of revenue to 20%. At the end of September, it had 51.1 million MoMo users. Its MoMo user base expanded to this figure from 11 million at the end of 2019. It further aims to reach the 100-million-mark by 2025. It is such a lucrative market that MTN is considering spinning its mobile money unit as a standalone company.

What MTN’s Momo can do with the PSB License in Nigeria

  • Deposit: Accept deposits and provide savings accounts to its customers — individuals and small businesses.
  • Cross-border Transfers: Help with cross-border transfers using all of the options accepted by the CBN.
  • Payment Cards: Issue debit and prepaid cards and manage electronic wallets.
  • Investment: Invest a percentage of the deposits received into FGN and CBN Securities.

What can you do as a Customer with MoMo

  • Purchase airtime and bundles: Do you need airtime, data, or SMS bundles right away? Even if you’re not with MTN, you can get them on MoMo.
  • Pay your bills: Use your MoMo account to pay utility bills, education expenses, DSTV, and other bills.
  • Start saving: Even if you don’t have a bank account, you can start saving money with MoMo.
  • Collaboration: Request payments, produce bills, post invoices, and collect payment from your customers all in one place.
  • Payments: Use the MoMo Business bulk disbursement interface to pay suppliers, employees, or any other group of people.
  • Remittance: MoMo wallets will be able to receive inbound remittance from any country in the world in the future, according to MTN

What MTN’s Momo cannot do with the PSB License

  • Loans: MoMo can not issue loans, advances and guarantees.
  • Foreign Exchange: Except for remittances, trading in foreign exchange is prohibited.
  • Insurance: It is also not allowed to issue insurance products.

To continue to operate, the CBN stipulates that at any one time, not less than 75% of the deposits received by Payment Service Banks must be held in Treasury Securities and other short-term Federal Government financial products. This means that the majority of the funds will be invested in safe assets.

Also, all funds in excess of a PSB’s operational float (the amount required to operate daily) must be deposited with commercial banks.

Therefore, while many people regard Payment Service Bank as a danger to banks, in practice they are to be supported by the banks. This is because their deposits are required to be placed with a bank of their choice.

How to Get Started

It is as simple as dialing *671# and opening an account with a 4-digit pin. Once you open an account you will automatically be allocated a wallet. To transfer money from your MoMo wallet, the following is to be done:

  1. Go to your other bank app and choose ‘AccessYello and Beta’ as the bank name (Soon to be replaced by MoMo PSB)
  2. Input your MoMo PSB number without the first 0 as the account number, i.e. ‘8030000123’
  3. You can also deposit money into your MoMo PSB wallet at MoMo agents.

To withdraw cash from your MoMo PSB wallet, you would have to visit a MoMo Agent or transfer to other banks. There will be a feature to locate agents on the app. MTN has over 300,000 mobile money agents spread across the country and plans to add multiples of that figure in the next few years. You can register to become an agent by following the instructions on this link. Just as its network is ‘everywhere you go’, MTN plans for its mobile money service to reach every nook and cranny of the country. There will be three tiers for transaction limits:

Tier 1 — Maximum single transaction limit of N50,000, daily transaction limit of N100,000 and maximum cumulative balance of N300,000.

Tier 2 — Maximum single transaction limit of N200,000 and maximum cumulative balance of N500,000.

Tier 3 — Maximum single transaction limit of N5,000,000 and no limit on cumulative balance

Sending funds to family and friends with a MoMo wallet is through dialling *671*1*1*Phone Number#, then entering the amount and pin.

For those looking forward to a mobile app, MTN says customers will be updated once it is ready. For listing on the mobile banking app of other banks, MTN is currently working to get the banks to update their interfaces with MoMo PSB. The functionality of sending funds to those without accounts is not yet available. Remember that opening an account is as simple as dialling *671# on your phone. For other questions, they may be reached via WhatsApp on 09030001782.

A Welcome Development for the Nigerian Economy

While banks must charge expensive fees on low-value transactions, deterring poor clients from participating, telcos can capitalize on the reality that those customers currently utilize their voice (and, most likely, data) services to offer value.

However, these telcos’ success in achieving financial inclusion is not guaranteed. Consumer buy-in will require large awareness campaigns in the target areas, according to GMSA assessments. Because each cannot function in isolation, strategic collaborations with banks, microcredit lenders, and insurance firms will be critical to long-term success.

For too many elites, Mobile Money Banking does not seem a big deal but its impact will be felt by tens of millions of Nigerians. It is easy to take for granted the ability to send money to a family member without making a potentially dangerous trip in this era of rampant insecurity, or the ability to save money on a smartphone rather than beneath a mattress. However, having alternatives to carrying all of your money in cash is new to millions of individuals around the country. The impact of mobile money on the economy will be significant.

According to MIT research published in 2016, M-Pesa (a mobile money banking service) is responsible for pulling 2% of Kenyan households out of poverty. That translates to almost 250,000 families out of the clutches of penury. Another study in Uganda in 2019 showed that mobile money increased remittances and non-farm self-employment as well as reduced the fraction of households with very low food security from 63% to 47%. Households with mobile money accounts were 22% more likely to save. Their average household savings also increased by 21%. The effects were most significant in female-headed households, which highlights how impact can be amplified when technology is given to female household leaders.

For MTN, the incentives to do fabulous work are great. Its share price is up almost 200% year to date, rising as much as 19% on the news of the provisional license. The stakes are high to make a success of this venture, but if there is an African company that can be trusted to become a powerhouse in Mobile Money, it is MTN.



'Tosin Adeoti