Reviewing MTN's MoMo PSB — what it is and how it works

Earlier in 2022, MTN, Africa’s largest telecommunications provider announced the launch of its Payment Service Bank in Nigeria under the moniker of Mobile Money Payment Service Bank (MoMo PSB). The announcement followed the company’s licensing by the Central Bank of Nigeria which allowed it to begin operations in the country.  

The milestone was regarded as a win for all parties involved — for MTN, who had tried consistently for years now to break into the payments market in Nigeria, and for the over 38 million Nigerians who had no access to financial services.

A month after launching MoMO PSB, MTN, the parent company, announced that it had registered 10.7 million users on the fintech platform. While the initial fanfare has died down, and the company has encountered some early troubles with banks, the service is still alive and thriving.

What can MTN MoMo do?

MTN’s MoMo PSB has been heralded as the company’s big chance at taking on Nigeria’s payments/financial technology market. The reason for this is the PSB license that it obtained.  According to experts, the license allows MTN to perform activities like:

• Accept deposits from customers
• Hold those deposits in an electronic wallet
• Offer saving products
• Invest in interest-bearing FGN and CBN securities
• Engage in different forms of local payments including merchant payments, bill payments, and person-to-person  (P2P) transfers
• Provide inbound remittance services
• Issue prepaid and debit cards
• Provide POS and ATM services
• Build a network of physical banking agents for deposits, payments, and withdrawals

In simpler terms, MoMo PSB’s license allows it to offer these financial services to Nigerians via their mobile phone numbers. This means that every MTN user with a mobile phone number can sign-up for MoMo PSB and get access to these services.

The perks of the license, coupled with MTN’s agent banking network and its large customer base are the main reasons many people expect the service to be a success. Prior to the MoMo PSB license, MTN had amassed over 70 million mobile subscribers across the country, and its agent banking company had over 800,000 agents.

The combination of these factors, and MTN’s positioning as the biggest telco provider,  is expected to deepen financial inclusion across the country. The PSB license also mandates the company to have at least 50% of its physical access points (i.e. agent stalls) in rural areas.

However, there are still certain limitations to what Momo can do with the PSB license. The company cannot provide loans or underwrite insurance. It also cannot hold foreign currency deposits or enable foreign exchange transactions except inbound remittances. Finally, it cannot accept alternative means of value e.g. airtime as payment. That last bit means that airtime cannot be converted to money, i.e. the company cannot use airtime as a medium of exchange between customers or itself.

How does MTN MoMo work?

While understanding what MoMo PSB is licensed to do gives us a peek into the potential future plans of the company, how it works gives us insight into what is currently obtainable.

MTN Momo is currently available via a mobile app and the USSD code: *671#.

Currently, the service is available to everyone with a mobile phone number. To activate it, all you need to do is dial *671#.

As a new user, once you dail the code, you will receive a welcome prompt letting you know that you will be charged a network charge of N6.98. This is a standard charge for USSD transactions in Nigeria. However, the amount is charged to your Momo wallet.

Up next, you’ll be required to create a 4-digit pin to confirm your account. This step also authorizes MoMo PSB to use your NIN details to register an account for you. You’ll be required to confirm your PIN again to verify your account.

Once all is done, you’ll receive a prompt letting you know that your Momo wallet has been opened and what your account number is. The account number given to you will be your phone number without the first 0 i.e. if your phone number is 08012345678, your account number would be 8012345678.

Once you have your account, you can dial the code again to access the MoMo menu. As of publication time, MTM MoMo offers the following services:

• MoMo Transfer - this option allows you to transfer money to a person’s phone number. Since every phone number is a defacto MoMo wallet, the receiver doesn’t need to be registered to receive the funds. They can always register after
• Buying Airtime/Data: This option allows you to purchase airtime or data for yourself or other people.
• Checking your wallet balance: as the name implies, this function allows you to check your wallet balance. It is, however, interesting to note that your wallet comes preloaded with N50.00. Presumably, this amount is loaded into your account to help cushion the earlier fees associated with signing up.
• Bill payment: Currently, MoMo PSB allows users to pay electricity, cable TV, betting, and loan collection bills to specific vendors. You can also use MoMo Pay to pay merchants you buy stuff from.
• Cash-out: You can withdraw cash from your MoMo account by either cashless withdrawals or via an agent. There’s an option to find an agent near you, but it doesn’t work at the moment.
• Referring a friend: You can refer a friend to join the MoMo PSB service, but
• Funding your wallet: You can fund your MoMo wallet either by transferring directly into it or by visiting a MoMo agent.
• To transfer directly to your wallet, go to your bank app and select AccessYello and Beta as the Bank name  (Soon to be replaced by MoMo PSB) and input your wallet number i.e. your phone number without the first 0
• To fund your wallet via a MoMo agent, find an agent near you and make a money transfer to them. They will make an equivalent transfer to your MoMo wallet.
• Account management: here, you can generate a mini statement for your wallet, set an alternate phone number to recover your account, or change your PIN

What is a MoMo PSB agent and how can you become one?

MoMo PSB agents are a key part of the company’s financial inclusion strategy. MoMo agents allow users to be able to credit their accounts, and more importantly, provide cash-out options, especially in rural areas where banks may be hard to find.

Becoming a MoMo agent can be profitable because of the revenue they make from transaction charges.

To become a MoMo PSB agent, you have to meet the following criteria:

• Have an existing business or be willing to invest in agency business.
• Have a Brick & Mortar/Immovable retail shop e.g. Pharmacy Pop & Mom Shop located in high foot traffic.
• Viable means of identification (National ID, Driver’s License, International passport, or Voters card).
• Readiness to provide 1 passport photograph.
• Capability to provide a Working Capital of N20,000 and above.

You can become a MoMo agent by dialing the USSD code: *502#

Conclusion

Although MoMo PSB’s financial play seems poised to deepen financial inclusion across the country more than any recent fintech innovations, it still has some kinks to work out.

While the USSD menu is quite easy to understand, many options that may aid accessibility still do not work. For instance, trying to find a nearby agent using the menu brings up an error message.

However, considering the work that has already been done. It is expected that these kinks will be worked out in due time. After all, the service is only officially a few months old. In the meantime, it will be interesting to see what other services MTN offers via its new financial subsidiary in the future.