EditorMTN Nigeria Communications Plc (MTNN) and Airtel Africa Plc have got assent from the Central Bank of Nigeria (CBN) to run payment service banks, Nigeria’s biggest two telecom firms said on Friday, more than two years after they approached the regulator for licensing.
The approval-in-principle requires them to each satisfy some conditions prior to obtaining final approval, according to separate regulatory filings by the telco’s.
Market watchers said it will give MTNN’s payment unit known by Momo Payment Service Bank Limited and Airtel’s SMARTCASH Payment Service Bank Limited leave to facilitate deposit acceptance and withdrawal services from persons and small businesses.
It will also enable them to execute payment and remittance on customers’ behalf within Nigeria.
Airtel said it will be handed the ultimate approval within a six-month timeframe once it meets the requirements.
A notable advantage the permit bestows lies in the power to issue debit and prepaid cards for use across e-banking channels, which does not have a place in the less sophisticated agency banking largely operated by street shops.
More importantly, the leave to run payment service banks allows licensees to offer most banking services apart from lending and receiving deposits in foreign currency, a paradigm shift that could redefine banking in Africa’s largest economy and open up the industry to greater competition.
On the strength of CBN’s nod, MTNN and Airtel will be invading the fintech services space dominantly occupied by lenders, but that will come at a cost and the fight this time might be fiercer than what the telcos went through to overcome resistance from their bank rivals before getting licensed.
Available records show that Fintech services are having their moment in Nigeria, where the pandemic outbreak is feeding a passion among users to shift the conduct of financial transactions away from banking halls to payment channels and the internet, perceived by many to offer better convenience.
Yet, commercial banks like Access Bank and Guaranty Trust Holding Company Plc, both of them among the country’s five biggest banks by assets, are now racing to set up payments divisions over ten years after peers in South Africa and Kenya first walked that path according to Bloomberg.
“The final operating licence will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services,” Airtel CEO Segun Ogunsanya said, hinting at the drive to gain potential markets like rural areas, which conventional banks may lack the capacity to penetrate.
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