Nigeria Fintechs Rescue MTN in Duel With Banks
By Chuks Emele
The message from telecoms giant MTN to its Nigerian customers was innocuous enough. But it’s import was far reaching.
“Dear Customer,” MTN told it’s 77 million subscribers, “our bank recharge channels are currently unavailable.” Customers were then directed to a link to other “recharge options.”
Belied in that understatement is the fact that all Nigerian banks, with the exception of one or two, had disconnected the country’s biggest mobile-phone operator with about 45 percent of all subscribers, can no longer carry out banking services using the Unstructured Supplementary Service Data or USSD function.
While telecoms companies and banks had an outstanding dispute over charges on banking transactions using phone lines, MTN went ahead last week to cut the amount due to banks to 2.5 percent of used airtime from previous 4.5 percent. The banks responded by taking the phone company off their network.
The immediate impact was that owners of MTN lines could neither renew their phone credits nor carry our banking transactions using the USSD module. Perhaps, equally significant is that MTN quickly found an alternative through fintech companies including Paystack, Flutterwave, Paga.
“It’s a development the banks should be worried about,” said Isotonu Achor, a Port Harcourt-based businessman, who was affected by the measure. “Without the fintechs MTN would’ve been helpless; but as things stand, the banks seem dispensable.”
The big question going forward is in what other ways are the banks supplantable by fintech companies. With the phenomenal growth of companies like Paystack, Flutterwave, Paga and others, it’s hard to tell.