MTN turns to Flutterwave, Opay, others as banks block 77m subscribers

April 4, 2021
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BARELY 24 hours after Nigeria’s deposit money banks disconnected MTN subscribers from their banking channels, including the Unstructured Supplementary Service Data (USSD) and banking apps, the mobile network operator has switched its customers to alternative electronic payment platforms.

This was disclosed in a statement by MTN Senior Manager for External Relations Funso Aina who stated that their customers could recharge airtime and carry out other online transactions through payment solutions platforms.

“It will interest you to note that for the benefit of our customers who have been greatly inconvenienced by the service suspension, we now have alternative channels of accessing MTN services electronically,” a section of the statement read.

The list of alternative payment solutions platforms to carry out transactions include Flutterwave, Jumia Pay, OPay, Kuda, Momo agent Carbon and BillsnPay.

Customers were advised to recharge airtime by dialling *904# and *606#.  The deadlock between the banks and mobile network provider has left millions of subscribers frustrated, as they are unable to recharge airtime via USSD during the Easter celebrations.

MTN has 77 million subscribers who make up 45 per cent of the total telecommunication market share in Nigeria. It is arguably the largest telecommunications operator in the country.

In March, the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) announced the introduction of new USSD service charges, which include paying a flat rate of N6.98 per transaction.

In another development, the telecommunication company reduced the banks’ commission from an average of 3.5 per cent to 2.5 per cent per transaction, prompting the actions of the banks to disconnect MTN subscribers from its service.

Several banks had notified the telco of disconnecting subscribers if they did not revert to the old commission, but when their appeal failed to sail through, they blocked MTN from their banking channels, leaving customers stranded and unable to recharge virtually.

Minister of Communications and Digital Economy Isa Pantami had said the matter would be resolved. “We have reached an advance stage of resolving the issues, for the services to be restored to our citizens,” he said.

What this means for Nigerian fintech companies

This move marks another notable validation of Africa’s growing fintech sector, which is providing solutions to problems by supporting legacy financial infrastructure or the lack of it -which has hampered African economies.

However, most of the fintech companies  in Nigeria are payment gateways, mobile money startups, neo-banks and remittance services.

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In 2019, Nigerian fintech companies received over $600 million investments from venture capital funding, compared to $1 billion which came into Africa within the same year. It was the first time Africa’s startups crossed the $1 billion threshold.

According to the Enterprise Development Centre (EDC) of the Pan African University, cash payment accounted for 95.3 per cent of transaction volumes in Nigeria at the end of 2018, while non-cash transactions would reach 17.8 per cent of total transaction volumes in 2023 from a paltry 4.7 per cent at the end of 2018.

With the sudden turn of events between MTN and the banks, more MTN customers are likely to turn to more online payments using the fintech platforms – boosting mobile and internet penetration for the fintech companies.

Local payment apps and gateway like Paga, and Barter -owned by Flutterwave – have also started offering money transfer services, and this is expected to reach an even wider number of rural users.

Opay network currently has over 300,000 agents and 5 million registered app users at its point-of-sale (POS) terminals deployed by its mobile money agents, but merchant network represented one – fifth of offline payments in Nigeria at the end of 2020. These are expected to gain more traction.

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