When MoMo PSB, MTN Nigeria’s fintech arm, lost 2.5 million active wallets in 2024— two years after its launch—CEO Karl Toriola claimed during an investors’ call the decline was part of a strategic shift to enhance service penetration, boost monetization, and lower customer acquisition costs.
Initially, the entry of MTN and Airtel Africa into Nigeria’s payment service sector in 2022 was expected to disrupt traditional banks and fintech firms. With MTN’s mobile money operations spanning 24 African countries and over 200 million wallets and Airtel Money serving 38 million users across 14 markets, both telecom giants were seen as formidable competitors. However, their impact has been more nuanced than anticipated.
MoMo PSB is one of five Payment Service Banks (PSBs)-four telecom operators and one fintech – licensed by the Central Bank of Nigeria (CBN) between 2021 and 2022 to drive financial inclusion, particularly in rural and underserved areas. Alongside 9mobile’s 9PSB, Airtel’s Smartcard PSB, Unified Payment’s Hope PSB, and Globacom’s Money Master PSB, it was established to provide banking services to individuals and businesses beyond the reach of traditional banks. However, the PSB licence doesn’t allow them to offer loans, forex services, or invest beyond government-approved securities, limiting their revenue potential.
PSBs have struggled to gain the same market traction as fintech giants like Opay, Moniepoint, and Palmpay, which have onboarded millions of users.
In Nigeria, mobile money adoption is primarily driven by banking agents due to poor internet connectivity and low smartphone penetration. Many people in rural areas lack smartphones or stable internet access, making digital banking services inaccessible. Hence, banking agents have become the most reliable way to reach unbanked rural dwellers.
Despite building an agent network, MoMo PSB has primarily relied on MTN Nigeria’s infrastructure to offer money transfers, savings, insurance, and payment solutions. The company has also received significant financial backing from its parent company to strengthen its position by building its digital banking infrastructure.
By the end of 2022, MTN Nigeria had invested ₦16.4 billion to establish and scale MoMo PSB’s operations. In 2024, it injected an additional ₦9.4 billion after acquiring the remaining 7.17% stake from Acxani Capital, making MoMo PSB a fully owned subsidiary. This investment initially yielded strong growth.
MoMo PSB’s active mobile money wallets surged from 2 million in December 2022 to 5.3 million by the end of 2023. This growth was driven by an expansion of its agent network, which grew from 103,000 to 327,000 within the same period. In March 2023, the company also launched a merchant ecosystem, which quickly scaled to 324,000 merchants by year-end.
In 2024, MoMo’s fortunes changed. The number of active wallets fell to 2.8 million, and cash deposits from wallet users dropped by half, from ₦7.6 billion to ₦3.8 billion. The agent and merchant networks also saw significant declines, shrinking by 76.8% to 75,168 merchants and 79.2% to 68,016 agents, respectively. While this suggested a shift from agent banking as the company deployed investments primarily in digital banking, some industry experts viewed it as a sign of a broader trend.
“A lot of payment service banks are focusing on cities and competing for existing bank customers, rather than targeting the rural communities they were designed to serve because the cost of banking the unbanked is high,” a fintech executive told anonymously.
Despite these setbacks, transaction volume increased by 4.3% in 2024, which CEO Karl Toriola interprets as a sign that MoMo PSB now has a higher-quality wallet base and that underlying demand remains strong.
According to Victor Asemota, Growth Partner, AnD Ventures, MoMo PSB is deliberately reducing its reliance on agents and merchants, many of whom engage in transactions solely for commissions. He also suggests that a fraud incident may have triggered a complete overhaul of the company’s strategy.
In May 2022, MoMo PSB experienced a significant security breach resulting in the loss of approximately ₦22.3 billion ($53 million).
“They are also forcing a change in the type and quality of customers,” Asemota told .
MoMo PSB is actively expanding its service offerings. The company has applied for Payment Service Solutions Provider (PSSP) and Payment Terminal Service Provider (PTSP) licenses. These would allow it to handle payment gateways, provide merchant aggregation services, and manage point-of-sale (PoS) terminals
This diversification strategy aims to reduce reliance on agents while better serving small and medium-sized enterprises (SMEs) and individual customers.
Looking forward, Toriola said the company will focus on user engagement and retention in a bid to reverse the decline in wallet usage and increase activity in the ecosystem before the end of the year.
