Key takeaways:
- MTN Nigeria's MoMo PSB has applied for two new licences: Payment Service Solutions Provider (PSSP) and Payment Terminal Service Provider (PTSP).
- This marks a rare regulatory precedent, as Payment Service Banks (PSBs) traditionally have limited licensing scopes.
- The additional licences will empower MoMo PSB to offer more versatile digital financial services across Nigeria.
- This move highlights evolving regulatory support for telecom-led financial services within Nigeria’s fintech ecosystem.
In a significant regulatory development, MTN Nigeria’s MoMo Payment Service Bank (PSB) has applied for two additional licences — Payment Service Solutions Provider (PSSP) and Payment Terminal Service Provider (PTSP) — which may redefine the scope of what financial services telecom-led PSBs can offer in Nigeria. This licensing expansion will uniquely position MoMo PSB, traditionally regulated as a PSB, to simultaneously operate in both PSSP and PTSP domains, enabling a broader suite of financial solutions for businesses and consumers alike.
This licensing approach diverges from the Central Bank of Nigeria’s (CBN) usual regulatory limits on PSBs, which generally restrict these entities from offering extensive payment services or managing physical banking terminals. PSBs were initially designed as "mini-banks" with the primary role of supporting financial inclusion by providing basic transaction accounts and facilitating cashless payments in rural and underserved communities. However, a dual licence for MoMo PSB will suggest that the CBN’s policy appears to be adapting to support broader, more integrated digital financial solutions led by telecom operators.
Expanding MoMo PSB’s capabilities and market impact
The PSSP and PTSP licences will grant MoMo PSB the ability to manage payment terminals and provide backend payment processing solutions for digital transactions. With this new regulatory flexibility, MoMo PSB will be able to offer both physical and virtual transaction processing solutions, extending its service reach to a wider network of merchants and end-users. This is a critical step towards addressing the limitations that have traditionally impacted PSBs, such as restricted transaction types and limited control over digital infrastructure.
MoMo PSB’s growing influence aligns with MTN’s strategic objective to expand its digital financial footprint across Nigeria. The additional licences will provide MTN’s fintech arm with the leverage needed to compete more directly with banks and established fintech firms by providing versatile payment solutions previously outside its operational scope. MoMo PSB has already achieved substantial traction in Nigeria, boasting millions of active wallets and a growing network of agents.
Regulatory shift signals evolving fintech landscape in Nigeria
This development underscores a broader shift within Nigeria’s regulatory landscape, where the CBN is cautiously adapting policies to keep pace with the evolving fintech sector. A successful application will signify the CBN's willingness to support the expansion of telecom-led financial solutions that could accelerate financial inclusion. The central bank’s openness to licensing adjustments aligns with its goals under the National Financial Inclusion Strategy, which targets a 95% financial inclusion rate by 2024. With a large portion of Nigeria’s population remaining unbanked, telecom-led solutions like MoMo PSB are seen as key drivers in reaching underserved communities.
However, questions remain about how far this regulatory flexibility will extend and whether other PSBs, such as Airtel’s SmartCash, will pursue similar licensing expansions. The regulatory path being set by MoMo PSB could encourage other PSBs to seek multi-licence models, enabling them to offer a more comprehensive suite of digital financial services. In turn, this may intensify competition across Nigeria’s fintech ecosystem, especially as traditional banks and standalone fintech firms adapt to the rising influence of telecom-led financial services.
The future of multi-licensed PSBs in Nigeria
MoMo PSB’s licensing success could set a precedent for redefining PSB operations within Nigeria’s financial system, particularly as telecom-led solutions become more prevalent in Africa’s mobile money landscape. With MoMo PSB leading the charge, it remains to be seen if other PSBs will follow suit. If multi-licensed PSBs become the norm, Nigeria’s financial services market may soon see an influx of innovative telecom-led payment solutions catering to a wider array of customer needs.
