MTN Nigeria, the nation’s largest telecom operator, has taken significant steps to expand its footprint in Nigeria’s digital payments landscape by applying for two key licenses for its fintech subsidiary, MoMo Payment Service Bank (PSB). These licenses—a Payment Service Solutions Provider (PSSP) and a Payment Terminal Service Provider (PTSP) license—position MoMo PSB to operate as a payment processor, payment gateway provider, and POS service provider. This expansion signals MTN’s ambition to deepen its role in Nigeria’s fintech space, leveraging its extensive customer base to support digital transactions and offer an alternative to traditional banking channels.
What the Licenses Mean for MoMo PSB
The PSSP license would enable MoMo PSB to build and operate payment processing gateways, enhance its own payment processing needs, and serve merchants with solutions like merchant aggregation and collection services. By managing its own payments, MTN could reduce dependency on other payment providers, such as Interswitch, thereby minimizing costs. The PTSP license, on the other hand, will allow MoMo PSB to deploy and service POS terminals, while also developing POS applications and offering training to its vast network of agents and merchants.
The combination of these licenses will allow MTN to address a range of financial service needs for its own operations as well as for over 302,000 merchants and agents on the MoMo PSB platform, which already boasts more than 5.5 million active digital wallets as of mid-2024. With this move, MoMo PSB will compete with established POS and digital payment leaders like Moniepoint, Opay, Palmpay, Interswitch, and Flutterwave.
MTN’s Growing Role in Nigerian Fintech
MTN’s expansion into digital payments is not new. Its earlier fintech subsidiary, Yello Digital Financial Services (YDFS), received a super-agent license in 2018, enabling bill payments and peer-to-peer transfers but limiting it from holding deposits in digital wallets. In 2022, MTN launched MoMo PSB with a Payment Service Bank license, adding services like bill payments, airtime, and money transfers. Despite its utility, the PSB license has limitations, excluding more complex financial services such as lending, foreign currency transactions, and insurance underwriting.
MoMo PSB’s expansion into payment processing and POS services represents MTN’s bid to capture a greater share of Nigeria’s booming fintech market, especially as it now targets SMEs and underserved populations in remote areas. This move follows a trend where telcos leverage their large customer bases to offer financial services, blurring the lines between telecommunications and banking in regions with limited access to traditional financial services.
The Cost of Expanding Fintech Capabilities
According to MTN’s Q3 2024 report, YDFS paid a ₦200 million licensing fee to acquire these new capabilities. In Nigeria, a PSSP license alone requires a ₦100 million fee after a ₦100,000 application fee, underlining the substantial financial commitment MTN has made to enter this competitive space.
MTN Nigeria has yet to comment on the applications, but the new licenses will undoubtedly set the stage for increased competition with established digital payment giants. For Nigerian consumers and merchants, MoMo PSB’s entry into the payments and POS markets may provide more affordable and accessible financial services options.
By pushing forward with these licenses, MTN is poised to offer a broader suite of financial services in Nigeria, advancing its digital finance ambitions and transforming its role from a telecommunications provider into a key player in the country’s digital economy.