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Mobile Money: YDFS Expands Cardless Cash Withdrawal Service to 44 Financial Institutions

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Mobile Money: YDFS Expands Cardless Cash Withdrawal Service to 44 Financial Institutions, SiliconNigeria

Mobile money service provider, Y’ello Digital Financial Services (YDFS) has announced the expansion of its MoMo Agent cardless cash withdrawal service to over 40 banks and other financial institutions nationwide, providing seamless financial solutions to more people.

 Initially exclusive to Access Bank, the service has now been extended to include First Bank of Nigeria, Zenith Bank, GTBank Plc, United Bank of Africa and other tier-one commercial banks.

 Using the service, customers can visit MoMo Agents nationwide to access funds in their bank accounts without requiring an Automated Teller Machine (ATM) or ATM card. The service utilises a secure gateway that protects customers against fraudulent transactions and requires transaction validation using their bank PIN.

Commenting on the expansion, Chief Executive Officer, Y’ello Digital Financial Services, YDFS, Usoro Usoro said, “We all must play our part in the Federal Government’s financial inclusion drive, which we know is essential for every Nigerian. With this, more MoMo users can walk up to the nearest MoMo Agent to withdraw cash from their bank account without visiting a bank or an ATM.” 

Launched in 2019, MoMo Agent expanded its financial services in 2020 for underbanked and unbanked communities to include bill payment, cash deposit and withdrawal, data and airtime purchase and bulk disbursement services. With an agent base of over 150,000 spread across over 700 local governments, customers on the MTN network can dial *223# to locate the nearest MoMo Agent.

Why it matters
With the cardless cash withdrawal service, MoMo Agents’ sustained innovation aligns with the Central Bank of Nigeria’s (CBN) financial inclusion target of 95% by 2024. This target was reviewed in 2019 as part of a five-year strategy to sustain inclusive economic growth.

To achieve this, Nigeria must attain an inclusive financial sector that has closed the gender gap. As at 2018, Enhancing Financial Innovation and Access (EFInA) revealed that only 59.1% of women compared with 67.5% of men were financially included representing a gender gap of 8.4%. The nature of mobile money makes it easier for women in rural areas to access financial services, which in turn stimulates economic growth.

The cardless cash withdrawal is a good initiative to deepen this inclusion. With the service, residents in rural areas can perform financial transactions without worrying about or using an ATM card. It is another major collaborative step between the mobile money service provider, YDFS and commercial banks in Nigeria.

List of Financial Institutions

  1. First Bank of Nigeria
  2. Zenith Bank
  3. GTBank Plc
  4. Access Bank
  5. Access (Diamond) Bank
  6. Ecobank PLC
  7. Standard Chattered Bank
  8. Fidelity Bank
  9. United Bank for Africa (UBA)
  10. Unity Bank
  11. Union Bank
  12. Sterling Bank
  13. First City Monument Bank (FCMB)
  14. Skye Bank
  15. Wema Bank
  16. Enterprise Bank
  17. Keystone Bank
  18. Jaiz Bank
  19. Stanbic IBTC Bank
  20. Suntrust Bank
  21. Heritage Bank
  22. Citi Bank
  23. Coronation Merchant Bank
  24. Pagatech
  25. Paycom
  26. Access Money
  27. Etranzact
  28. Eco Mobile
  29. Fidelity Mobile
  30. GT Mobile
  31. Zenith Mobile
  32. Money Box
  33. Safetrust Mortgage Bank
  34. Covenant Microfinance Bank
  35. NPF Microfinance Bank
  36. Fortis Microfinance
  37. ReadyCash
  38. Omoluabi Mortgage Bank
  39. Sterling Mobile
  40. Page MFB
  41. Stanbic Mobile Money
  42. Fortis Mobile
  43. TagPay
  44. FBN Mobile

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Mobile Money

MTN Targets $6 Billion Valuation for Mobile Money Business

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MTN Targets $6 Billion Valuation for Mobile Money Business, SiliconNigeria

MTN Group CEO Ralph Mupita said the company is targeting a valuation of between $5 billion and $6 billion for its mobile money arm, as it prepared the sale or listing of a minority stake in the unit.

Mupita outlined basic details about the future of its mobile financial services arm, which is set to be separated as part of a strategy to help it cash-in on various assets unveiled in March.

The company, which operates across several of Africa’s largest markets, has long prized its mobile money offer with the segment often cited as one of the major growth areas in the business.

Mupita said MTN planned to structurally separate the business within the next year. Funds raised from its money and infrastructure assets will go towards further cuts in MTN’s debt pile, adding to disposals of a number of parts of the business deemed non-core in the last two years.

MTN is also in the process of selling-up in the Middle East as it plans to focus its efforts on Africa.

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Mobile Money

Mastercard Invests $100 Million In Airtel Africa’s Mobile Money

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Mastercard Invests $100 Million In Airtel Africa's Mobile Money, SiliconNigeria

Airtel Africa today announced the signing of an agreement under which Mastercard, a leading innovator and global technology company in the payments industry, will invest $100 million in Airtel Mobile Commerce BV (AMC BV), a wholly owned subsidiary of Airtel Africa plc.

AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations and is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.

The Transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis. Mastercard will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the majority stake.

The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.

Raghunath Mandava, CEO of Airtel Africa, said: “With today’s announcement we are pleased to welcome Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago. This is a continuation of our strategy to increase the minority shareholding in our mobile money business with the further intention to list this business within four years.

“We are significantly strengthening our existing strategic relationship with Mastercard to help us both realise the full potential from the substantial opportunity to improve financial inclusion across our countries of operation. The combination of our extensive customer base and distribution platforms and Mastercard’s products and services, innovation and know how, mean we can together accelerate demand and drive growth in financial services for the benefit of all our customers and markets.”

Alongside the investment, the Group and Mastercard have extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others.

Following the announcement on 18 March 2021 of $200m investment in AMC BV by TPG’s The Rise Fund, and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on 23 March 2021, the Transaction is a continuation of the Group’s pursuit of strategic asset monetisation and investment opportunities.

As previously announced, Airtel Africa aims to continue to monetise its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV, and to explore the potential listing of the mobile money business within four years.

The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

 Airtel Africa mobile money services

Operating under the Airtel Money brand, Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.

Mobile money services are available across the Group’s 14 countries of operation, however in Nigeria the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence. It is the intention that all mobile money operations will be owned and operated by AMC BV.

In our most recent reported results for Q3, the mobile money service segment (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational performance:

·      Generated revenue of $110m ($440m annualised), and underlying EBITDA of
$54m ($216m annualised) at a margin of 48.7%.

·      Year on year revenue growth for the quarter was 41.1% in constant currency, largely driven by 29% growth in the customer base to 21.5m, and 9.7% ARPU growth.

·      Growth in transaction value was 53.0% to $12.8bn ($51bn annualised).

Our mobile money business benefits from strong network effects with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ assured wallet and cash.

We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

In this year alone, in addition to Mastercard, we have added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.

The profits before tax in the full year ending 31 March 2020 and value of gross assets as of that date, attributable to the mobile money businesses were $143.4m and $463.2m, respectively.

 Key elements of the Transaction

·      Agreement values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis.

·      AMC BV, a wholly owned subsidiary of Airtel Africa, is currently the holding company for several of Airtel Africa’s mobile money operations; and is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries once the inclusion of the remaining mobile money operations under AMC BV is completed.

·      Mastercard (through one of its wholly owned subsidiaries) will invest $100m through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages. $75m will be invested at first close, once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $25m to be invested at second close upon further transfers.

·      Airtel Africa aims to explore the potential listing of the mobile money business within four years. Under the terms of the Transaction, and in very limited circumstances (in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close, or in the event of changes of control without Mastercard’s prior approval), Mastercard would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value (determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology). The option is subject to a minimum price equal to the consideration paid by Mastercard for its investment (less the value of all distributions and any proceeds of sale of its shares, and with no time value of money or minimum built in) and a maximum number of shares in AMC BV such that the consideration does not exceed $200m.

The Transaction is expected to reach first close over next three to four months. From first close, Mastercard will be entitled to certain customary information and minority protection rights.

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Mobile Money

Mobile Money Transactions Up $12.7 Billion In 2020 Driven by Pandemic

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Mobile Money Transactions Jumps To $12.7 Billion In 2020 Driven by Pandemic, SiliconNigeria

Mobile Money accounts grew by 13 per cent globally in 2020 to more than 1.2 billion driven by the global pandemic, with total transactions value increasing by 65 per cent to $12.7 billion during the period.

 According to the GSMA’s annual State of the Industry Report on Mobile Money, released yesterday, there was a dramatic acceleration in mobile transactions during the COVID-19 pandemic as lockdown restrictions limited access to cash and financial institutions.

The report said the fastest growth was in markets where governments provided significant pandemic relief to their citizens. To minimise the economic toll of COVID-19, many national governments distributed monetary support to individuals and businesses.

The value of government-to-person payments quadrupled during the pandemic, with the mobile money industry working hand-in-hand with administrations and NGOs to distribute social protection and humanitarian payments quickly, securely, and efficiently to those in need.

For the first time, more than $1 billion was sent and received in the form of remittances globally every month via mobile money. Despite early fears that transactions would decline as people worldwide suffered job losses and income cuts during the pandemic, it remains clear that Diasporas continue to support family and friends back home.

Facilitating this type of direct income support payments is one example of how mobile money provides a financial lifeline to underserved communities. Mobile money providers have also provided in-kind support, including the distribution of personal protective equipment (PPE) and hand sanitising gel at agent counters.

The GSMA’s chief regulatory officer, John Giusti said, “We see that mobile money is a powerful tool for expanding the financial inclusion of women in low- and middle-income countries. This year’s report, however, found that across markets women are still 33 per cent less likely than men to have a mobile money account. The GSMA and its members are committed to closing this gender gap by addressing the barriers that prevent women from accessing and using mobile financial services.”

Closing the gap requires a collaborative and concerted effort. Many providers have committed to increasing the proportion of female customers. One example of an innovative approach to this is launching micro-entrepreneur products that can be used in markets where women represent the majority of vendors and customers.

In working towards achieving the Sustainable Development Goals (SDGs), the GSMA remains committed to reducing inequalities among countries when sending money internationally.

According to GSMA’s research, mobile money provides an affordable channel for connecting people to vital financial resources. The mobile money ecosystem has been strengthened by an increasing number of strategic partnerships established between money transfer organisations and mobile money providers.

As the COVID-19 pandemic negatively impacted people’s lives and weakened economies, regulators responded with a variety of measures aimed at reducing the impact. The research found that the pandemic gave fresh urgency to the need for regulatory change to facilitate greater digitalisation. In many markets, transaction limits were increased to allow more funds to flow through mobile money.

Additionally, as demand rose for non-physical payments, some regulators classified mobile money agents and their supply chains as essential services. Over 50 per cent of mobile money agents were continuously active throughout the pandemic, which was crucial for service continuity and maintaining liquidity.

While some of the regulatory reforms made in response to the pandemic have been positive for customers and providers, the implementation and extension of fee waivers has had a negative impact on mobile money providers’ core revenue stream. Mobile Money providers depend mainly on transactional revenues to sustain their business.

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