MTN taking on South Africa’s big banks

South Africa’s second-largest mobile network operator, MTN, plans to take on the country’s big banks by expanding its digital financial services platform, MoMo.

MTN aims to build the country’s largest and most valuable platforms as part of its Ambition 2025, offering comprehensive financial services such as insurance, payments, transfers, and eCommerce. 

MoMo’s expansion in South Africa will be led by MTN’s CFO for the country, Bradwin Roper, who was previously CEO of FNB Connect. 

MTN is targeting the unbanked population in South Africa and aims to reduce the use of cash in the local economy. Currently, 35% to 50% of all transactions are conducted in cash.

MoMo focuses heavily on the informal economy – particularly the 150,000 spaza shops in South Africa worth an estimated R178 billion. 

To achieve these goals, MTN has launched several new features on MoMo.

  • MoMo Eazi: This allows customers to register and conduct their first transaction within two minutes.
  • Funeral cover with Sanlam: Customers can purchase prepaid funeral cover from R75 per month, with 5% cash back and zero transaction fees on the app.
  • MoMo business: This is a free business wallet with a linked QR code and USSD merchant ID to receive payments.
  • MoMo POS: This point-of-sale device accepts payments via traditional card channels and can be used to sell airtime and data as well
  • Africa to Africa cross-border remittances: MoMo will now facilitate cross-border remittances with a 4% fee within ten African countries, including South Africa – no bank account required. However, only outbound remittances will be enabled for South Africa due to regulatory approvals pending. 

These products will complement MoMo’s current offerings, which include personal loans, digital payments, and licence renewals. 

Central to this strategy is MTN’s zero service fees, whereby the company will offer all the services, bar remittances, on the app for free without transaction fees, registration fees, or account fees. 

MTN South Africa CEO Charles Molapisi said the company is focused on the sustainability of its pivot to fintech and wants to scale the products quickly in line with its Ambition 2025 strategy. 

Their plan to take on South Africa’s big banks is ambitious, as Molapisi and Roper admitted that South African banks have already taken tremendous strides in digitising their businesses.

Molapisi cited MTN’s success in rolling out fintech products across Africa, in particular in Nigeria and Ghana. 

However, he was quick to add that the South African market is a completely different ball game with established financial institutions, telecommunications operators, and disruptive fintech companies. 

MoMo currently has 9 million users in South Africa and is among the country’s top 10 most popular financial services applications. 

Across the MTN Group, the company’s fintech platforms have 69 million users and is aiming to grow this to 100 million by 2025.