2.5 Million Wallets Lost in 2024
MTN Nigeria’s fintech arm, MoMo PSB, lost 2.5 million active wallets in 2024, marking a 46% decline in usage just two years after its launch.
During an investors’ call, CEO Karl Toriola explained that the decline was part of a strategic shift aimed at increasing service penetration, improving monetization, and lowering customer acquisition costs.
High Hopes for Telecom-Led Mobile Money
When MTN and Airtel Africa entered Nigeria’s mobile payments sector in 2022, they were expected to disrupt traditional banks and fintech firms.
- MTN operates mobile money services in 24 African countries with over 200 million wallets.
- Airtel Money serves 38 million users across 14 markets.
However, their impact has not been as strong as expected, as competitors like Opay, Moniepoint, and Palmpay continue to dominate the market.
Challenges Facing MoMo PSB and Other Payment Banks
MoMo PSB is one of five Payment Service Banks (PSBs) licensed by the Central Bank of Nigeria (CBN) between 2021 and 2022 to improve financial inclusion in rural areas.
The other PSBs include:
- Airtel’s Smartcash PSB
- 9mobile’s 9PSB
- Globacom’s Money Master PSB
- Hope PSB (owned by Unified Payments)
Unlike commercial banks and fintech firms, PSBs are restricted from offering loans, forex services, or investments beyond government-approved securities—a limitation that affects their profitability.
Dependence on Banking Agents and MTN’s Infrastructure
In rural Nigeria, poor internet connectivity and low smartphone penetration mean that banking agents play a crucial role in mobile money adoption.
READ ALSO: MTN Nigeria’s MoMo PSB Applies for Expanded Licensing
- MoMo PSB built an agent network but largely relied on MTN’s existing infrastructure for services like money transfers, savings, insurance, and payments.
- MTN invested ₦16.4 billion in MoMo PSB in 2022 and an additional ₦9.4 billion in 2024, making MoMo a fully owned subsidiary after acquiring the remaining 7.17% stake from Acxani Capital.
Rapid Growth, Then a Sharp Decline
MoMo PSB initially saw rapid growth, expanding its active wallets from 2 million in December 2022 to 5.3 million by December 2023.
This growth was fueled by:
✅ Expanding agent network (from 103,000 to 327,000).
✅ Launching a merchant ecosystem (growing to 324,000 merchants by the end of 2023).
However, in 2024, MoMo PSB saw a major decline:
🔻 Active wallets dropped to 2.8 million.
🔻 Cash deposits from users fell by 50% (from ₦7.6 billion to ₦3.8 billion).
🔻 Merchant network shrank by 76.8% (to 75,168 merchants).
🔻 Agent network declined by 79.2% (to 68,016 agents).
Why the Decline?
While MoMo PSB shifted focus from agent banking to digital banking, industry experts suggest that many PSBs are focusing on cities instead of rural areas.
“A lot of payment service banks are competing for existing bank customers instead of targeting the rural communities they were designed to serve because the cost of banking the unbanked is high,” an anonymous fintech executive told TechCabal.
Despite these setbacks, transaction volumes increased by 4.3% in 2024, which CEO Karl Toriola believes is a sign that MoMo PSB now has a higher-quality wallet base.
Security Breach and Shift in Strategy
In May 2022, MoMo PSB suffered a major security breach, losing approximately ₦22.3 billion ($53 million).
According to Victor Asemota, Growth Partner at AnD Ventures, MoMo is now reducing reliance on agents and merchants—many of whom perform transactions only for commissions.
“They are also forcing a change in the type and quality of customers,” Asemota said.
Expanding Services Beyond Wallets
To strengthen its digital banking strategy, MoMo PSB has applied for:
📌 Payment Service Solutions Provider (PSSP) license – To handle payment gateways and merchant aggregation.
📌 Payment Terminal Service Provider (PTSP) license – To manage PoS (Point-of-Sale) terminals.
These new licenses will allow MoMo to better serve small and medium-sized enterprises (SMEs) while reducing dependence on banking agents.
What’s Next for MoMo PSB?
CEO Karl Toriola says MoMo PSB will now focus on:
✅ User engagement and retention.
✅ Increasing wallet activity before the end of 2025.
With this strategic shift, MoMo PSB aims to reverse its decline and remain competitive in Nigeria’s mobile money industry.
