MTN has revealed that multinational payment processing company Mastercard is set to acquire a minority share in its fintech division. In their mid-year 2023 group results presentation, MTN announced that Mastercard has entered into a Memorandum of Understanding (MoU) for a minority investment in MTN Group Fintech. The finalization of the agreement is pending the completion of customary due diligence and standard closing conditions.
MTN Group Fintech encompasses MTN Mobile Money (MoMo), the mobile service that operates across 17 African countries and has nearly 70 million users. This strategic move by Mastercard aligns with MTN's larger plan to offer up to 30% of its fintech business to external investors.
Under this collaboration, MoMo users will gain the ability to create virtual Mastercard payment cards linked to their MoMo wallets. This development will also facilitate Mastercard payments for Group Fintech merchants. MTN intends to leverage Mastercard's extensive network and customer base to expand its fintech services.
MTN values its fintech business at $5.2 billion for the Mastercard investment. In the first half of 2023, MTN Group's fintech revenue witnessed a substantial increase of 21.7%, reaching approximately $520 million compared to the same period in the previous year.
During the initial six months of 2023, MTN's MoMo service handled 8.3 billion transactions totaling $135.2 billion. The user base remained stable at 61 million monthly active users from H1 2022 to H1 2023. Factors like cash scarcity in Nigeria at the year's start and user base optimization in Côte d'Ivoire contributed to this limited growth. However, MTN remains positive about its future prospects, with a target of reaching 100 million monthly active users, 2 million agents and 3 million merchants by 2025.
While MTN sees significant potential in the data and fintech segments, including the expansion of its MoMo service, there are several challenges on the horizon. These include geopolitical factors, inflation and fluctuations in exchange rates for the Nigerian naira and the South African rand against the US dollar. Since the conclusion of the lockdown period in 2021, fintech transaction volume has surged by 3.2 times, indicating strong demand in this sector.
