Nigeria has an active mobile phone subscriber base of over 90 million, dwarfing the number of bank account holders. With such broad market penetration and acceptance, mobile phones are crucial to the Central Bank’s goals.
The CBN defines the scope of mobile payments in Nigeria as covering “the various components required to deliver mobile payment to the banking and non-banking community,” and has approved the following models:
- Bank Focused Model: a licensed deposit-taking bank provides the mobile money service
- Bank Led Model: a bank (or consortium of banks) acts as lead initiator and partners with other qualified organisations to provide mobile money services
- Non-Bank Led Model: a CBN-licensed corporate entity has the role of lead initiator. The model excludes mobile network operators (MNOs) and other telecoms companies from being lead initiator.
The CBN has deliberately steered away from a model that has a MNO as the lead initiator, as is the case in Kenya. This stems from concerns about potential regulatory gaps, since the MNOs are primarily regulated by another body, with the CBN keen to ensure any “deposit taking” institution is duly licensed and supervised. It also reflects the CBN’s desire to ensure openness and interoperability, which may not be possible under such a model.
Leading the way
The CBN licensed 11 mobile money operators in August 2011. Three of the licensees are banks (GTBank, UBA and Stanbic IBTC), operating under the bank led model. The remaining licensees come under the non-bank led model, and include Fortis Mobile Money, Pagatech and Monitise.
Irrespective of the model used, the MNOs are key partners to the lead initiators (banks or non-banks), providing access to their mobile payment infrastructures and agent networks. Furthermore, the rules allow them to partner with more than one lead initiator. For example, MTN, a leading GSM operator, has partnered with GTBank, UBA and Fortis Mobile Money.
Meanwhile, under each of the models participating agents will be mainly responsible for registering and activating Mobile Money customers, and providing cash in / cash out services to Mobile Money account holders and recipients.
In the next issue of Perspectives we look at the challenges of identification and security in the Nigerian market.
By Egheosa Onaiwu, Manager in Nigeria