MTN Nigeria was recently given final approval by the Central Bank of Nigeria (CBN) to provide Mobile Money (MoMo) Payment Service Bank (PSB).
The apex bank aims to improve the financial inclusion of the most unbanked rural population and also increase competition, particularly among commercial banks and Fintechs through the licensing of mobile communication firms to provide mobile money services.
However, the communication firm’s PSB license does not confer on it the power to operate as a commercial bank. The operations of Commercial Banks and PSBs are clearly different.
About MTN Momo Payment Service Bank
Payment Service Banks (PSBs) are to function in rural areas and areas where Nigerians do not have bank accounts. This indicates that MTN expects to have at least 50% of physical access points (also known as kiosks) in rural areas.
MTN is expected to mobilize deposits through its technology and agency banking and also enable unbanked consumers to transfer funds. It is approved to provide savings accounts to its customers.
The communication firm is allowed to invest a part of the deposits in short-term secure assets in FBN and CBN Securities, allowing them to make profits from customers’ funds. The CBN states that at any point in time, not less than 75 percent of the deposits they acquire must be retained in short-term secure assets like treasury bills.
MTN with the PSB license is also approved to facilitate cross-border transfers through all methods available in the country.
The communication firm will also deploy ATMs in some locations to enable Customers’ withdrawal of cash just like commercial banks. It will in this regard provide debit and prepaid cards.
However, unlike the deposit commercial banks, MTN does not have the power to provide loans and advances, issue insurance products, and trade in foreign exchanges except for remittances.
The CBN requires the PSBs to place the funds in excess of what it requires to operate on a daily basis, with commercial banks.