Afrikan Heroes

In Nigeria, 9mobile has changed everything about itself: from its name, which was previously Etisalat, and up to the point of who owns it. The telecom company’s latest strategic change has nothing to do with the industry in which it is currently playing — telecommunication. Two years after Nigeria’s central bank issued the Guidelines for the Licensing and Regulation of Payment Service Banks in Nigeria, 9mobile has become the country’s first ever company (through its subsidiary called 9PSB) to secure a payment service bank license, ahead of even fintechs who were often fingered whenever such a little-known banking style is mentioned. Joining 9mobile in the new licensing galore are Hope PSB, Moneymaster PSB.

“We are happy to be the first Payment Service Bank to provide all Nigerians with access to banking services and open up a digital world of possibilities to improve everyday lives. We know that this new development will further improve the country and the people going forward. In 2018, 9mobile partnered with Nigerian bank, UBA to roll out 9Pay, a mobile payments solution while also pushing for a fintech license. We are delighted that we have now secured finale approval for a Payment Service Bank,” the CEO of 9mobile, Mr. Alan Sinfield said. 

A Deal Breaker, But The Stiffest Of Competition

9mobile is, however, not wasting any time with its new glory. After a chequered outing being a telephone communication company, in which it is still floundering for breaths, the company has quickly set the ball rolling with a new USSD code, signalling it has arrived, ready and fit to slug it out with existing well-capitalised commercial banks and the barely regulated fintechs. The code is *990#, and Nigerians will get a feel of it soon. 

“The financial inclusion that 9PSB will provide will be an enabler to achieving unparalleled benefit in everyday transactions,” said the CFO of 9mobile, Mr. Phillips Oki. “The *990# allows Nigerians to perform all financial transactions including utilities payment from the comfort of their phones and homes on any mobile network at no charge.”

But then, 9mobile’s 9PSB will face an uphill task in the coming months. Although a recent survey conducted by the Enhancing Financial Innovation and Access (EFInA) in 2018 indicated that over 60% of Nigerians above the age of eighteen are totally unbanked, Nigeria is home to hundreds of financial services companies, competing, yet never completely capturing all of these unbanked people. For instance, even with over 500 branches and business offices in all states in Nigeria, Nigeria’s Zenith Bank Plc, one of the country’s largest banks by market cap (₦4.83 trillion as at 2017), and largest bank by customer deposit, still has less than 2 million accounts. 

9mobile is, nevertheless, banking on its existing infrastructure to scale. 

“With a large network of agents strategically located in both urban and rural communities,” said Oki, “9PSB is going to make sending and receiving money possible, easier, seamless and less stressful for all Nigerians. 9PSB is also available on mobile App and internet banking for ease of banking and simplicity. Over the coming weeks 9PSB will unveil its products and services to Nigerians.”

But this strategy too, it has no monopoly of. MTN, the country’s largest telco by market shares, has its own network of agents and mobile money services. Last year, MTN launched its mobile money service, MoMo, operations in Nigeria. Through the service, MoMo customers can send a text for free and get a response giving them a list of registered agents near them. The customers then transfer sums of money to the agents who in turn give them a code to be transmitted to the receiver. The receiver goes to an agent near them and collects the cash. Among the telecom companies, MTN is not alone. Glo, the first telco to be licensed as a super agent to carry out mobile money business in Nigeria, with its “Glo Xchange,” has outlets spread across the country where customers can visit to carry out mobile money transactions such as customer registration, cash –in, cash-out, airtime purchase, bill payments etc. 

Fighting 9mobile in its new territory will, therefore, be a multitude of unregulated financial technology companies as well as traditional banks with large capitalization and telcos themselves. 

Read also: MoneyGram Enters 28 African Countries With New Mobile Money Offering

What Difference Will A Payment Service Bank License Make?

Although 9mobile pretty much will be replicating what most traditional banks are doing, one major difference is that unlike traditional banks, 9mobile’s 9PSB is not permitted under the regulation to give loans or any form of credit facilities to its customers. Another difference is that at least 50% of 9PSB’s services must be located in rural areas, and unlike most fintechs which operate (or piggyback on) microfinance banking only in permitted geographical territories, 9PSB’s operations are allowed nationally. 

A Payment Service Bank (PSB) is a new category of bank with smaller scale operations and the absence of credit risk and foreign exchange operations. In addition to accounts (current and savings), PSBs can also offer payments and remittance services, issue debit and prepaid cards, deploy ATMs and other technology-enabled banking services. Think of them as basically stripped-down versions of traditional deposit money banks, with limited functionality and a focus on onboarding more of the excluded and marginalised population.

Under Nigerian central bank’s regulations, subsidiaries of mobile network operators (aka telcos), mobile money operators, retail chains (supermarkets) and banking agents are welcome to apply for the PSB license, provided they can meet certain requirements, including a 5 billion naira ($12million) capital base, and a combined 2.5 million naira ($6.4k) application and license fee (which are non-refundable).

9mobile ’s new banking license is coming after the CBN issued an updated and revised guideline for the licensing and regulation of Payment Service Banks in Nigeria on August 27, 2020. The telco is not the largest in the West African country. MTN has the largest chunk of the market with over 74 million subscribers, followed by India’s Airtel with over 52 million users; locally owned Glo at 52 million; and then 9mobile with a meager 12 million users. Visaphone (which is merely an extension of MTN, having being acquired by the telecom giant in 2015 to boost its 4G capacity) comes last with just a little over 137, 000 users.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer