MTN plans to seek a banking license in South Africa once the South African Reserve Bank (SARB) opens its national payments system to fintechs and other non-banking entities, Business Times reports.
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Currently, MTN provides limited banking services through its MTN Mobile Money (MoMo) platform, which facilitates payments and money transfers using phone numbers as digital wallet identifiers. MoMo primarily targets small, informal businesses, such as spaza shops, and the low-income mass market, where cash transactions still dominate.
To operate these services, MTN must rely on a licensed bank sponsor, currently African Bank. However, SARB is reportedly working to give non-banking entities direct access to the core clearing and settlement system. Tim Masela, head of SARB’s National Payments System department, acknowledged the role of banks for savings and accounts but highlighted the need to embrace change as non-banks increasingly offer convenient transactional services. “We need to move with the times and open up the system for the entry of non-banks,” Masela stated.
MTN South Africa’s chief fintech officer, Kagiso Mothibi, confirmed to Business Times that MTN will pursue a banking license once the regulatory frameworks are finalized. “When that is rolled out, we’ll definitely be looking to pursue our own licence,” Mothibi said. MTN is actively participating in SARB working groups to help shape these frameworks, which aim to promote innovation while managing risks within a more open financial system.
A banking license would allow MTN to control its banking operations more directly and further develop MoMo as a low-cost alternative to traditional banking. MoMo has already grown to 11 million registered users, with three million active users. Key enhancements, such as a business wallet, international remittances launched in September 2023, and a February 2024 Mastercard partnership offering virtual and physical cards, have fueled this growth. The Mastercard deal follows its acquisition of a minority stake in MTN Group Fintech. MTN’s fintech revenue surged 59.1% year-on-year in the first half of 2024 and 61.8% in Q3 2024 compared to the previous year.
This move reflects a broader trend among telecoms diversifying into financial services. Competitors like Vodacom, with its VodaPay and M-Pesa platforms, are also addressing slowing cellular revenue caused by market saturation, declining data prices, and growing competition.
