MTN awaits SARB approval for banking licence acquisition

Bypassing a traditional banking partner and having a licence will enable MTN to gain greater control over the growth of its banking services.

SARB will allow NBEs access to its national payment system

Currently, MTN provides limited transactional banking services through the MTN Mobile Money (MoMo) platform. This platform enables payments and transfers for individuals and businesses using phone numbers as identifiers for digital wallets instead of traditional bank account numbers.

MoMo primarily caters to small businesses, such as spaza shops, and the low-income mass consumer market, which depends on cash transactions.

To provide these services without holding a banking licence, MTN is required to collaborate with a licenced bank as a sponsor. For its MoMo services, the company partners with the African Bank.

As SARB is exploring ways to allow non-banking entities to gain direct access to the core clearing and settlement system, MTN and other companies like it will be able to engage directly with the banking system and pursue their own licence.

SARB notes that, although banks remain the foundation of South Africa’s financial system, non-bank entities are increasingly providing convenient transactional services, and they should be able to enter the system. SARB plans to make this happen by carrying out the necessary frameworks with working groups.

With the help of MoMo as one of the several fintech companies that participated in working groups, SARB aims to create a regulatory framework to enable broader direct participation in core banking services. The development of these frameworks is essential to strike a balance between growth and risk management.

More about MTN

MTN’s goal is to position its MoMo service as a low-cost alternative to traditional banking accounts. This service has grown to 11 million registered users, with almost three million active users. This growth has been determined by MTN introducing several key enhancements to MoMo over the past two years.

In September 2023, MTN launched a business wallet and international remittance services. In February 2024, the company announced a partnership with Mastercard, providing all MoMo wallet holders with virtual and physical cards that could be used for payments across numerous countries.