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What to know about Airtel payment service bank ‘SmartCash’

Airtel, Africa Plc has launched Banking service in Nigeria as its subsidiary, SmartCash Payment Service Bank Limited (SmartCash PSB), has been granted a license by the central bank of Nigeria (CBN) to commence its operation.

Airtel which made this known in a statement on May 19, 2022, noted that it now has its presence in almost 14 countries across Africa. SmartCash PSB will first be trialled at selected retail touchpoints, and operations will be expanded gradually across the country over the next few months.

Airtel would operate PSB via its Smartcash Payment Service Bank Limited while MoMo Payment Service Bank Limited would be MTN’s PSB. Other PSBs would be run by Glo and 9Mobile. the report stated.

“Bringing SmartCash PSB to Nigeria is the start of its journey to revolutionise the financial services landscape in the country while also helping the larger economy.” Said Segun Ogunsanya, CEO and Managing Director of Airtel Africa.

“To help further digitise the economy, and most importantly to help bank the unbanked by reaching the millions of Nigerians who do not currently have access to financial services by delivering current and savings accounts, payment and remittance services, debit and prepaid cards, and more sophisticated services,” he added.

Smartcash PSB is a customer-first digital bank with the aim of bringing financial services closer to every Nigerian by leveraging its vast distribution network to improve financial inclusion.

According to Mondaq, payment service banks accept deposits from individuals and small businesses, carry out payment and remittance services within Nigeria, issue debit and prepaid cards, operate electronic purses, and other activities prescribed by the CBN.

Therefore, Airtel would provide these services since it has commenced its operation. In doing so, they would be joining the likes of OPay and Paga in that space. One of the goals of the CBN is to provide financial inclusion in the country.

The World Bank defines financial inclusion as access to valuable and affordable financial products and services delivered responsibly and sustainably. These services include payments, savings, credit, insurance, and transactions.

It goes on to say that having a transaction account is the first step towards financial inclusion, as it provides individuals and businesses with a way to receive, send, and store money.

Consequently, while the telcos would not offer a full suite of financial services, they would be able to provide users with an entry into the financial system.

A significant reason for the optimism shown is the potential of telcos to fast-track the CBN’s financial inclusion goal. This is mainly due to their comprehensive coverage in the country, especially in rural areas that house most of the unbanked population.

Furthermore, MTN and Airtel have the largest and third-largest subscribers at 67.5 million and 42 million, respectively. Even accounting for multiple SIM cards as is common in the country, those figures are significantly higher than the top three Nigerian banks by customer base.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) puts the number of bank accounts in Nigeria at 191 million as of December 2021. At the same time, the Nigerian Communications Commission (NCC) reports 197,768,482 active lines as of February 2022.

However, the total BVN count as of April 2022 was 54,241,963 Given that no one can have more than one BVN, it is safe to assume that the number of bank account holders in Nigeria is around the 79 million mark.

Having successfully set up mobile money services in other parts of Africa, Airtel could replicate the success in Nigeria. This development bodes well for Nigeria’s unbanked population as it would serve as a gateway into the financial services sector. While the PSBs cannot give loans, having a transaction account enables their users to access loans for their businesses and education.

Granting PSB licenses to the telcos is, however, just one step towards achieving financial inclusion, which entails more than having a bank account.

This license will help to open up its mobile money business to its 44.4 million customers in Nigeria, with the potential of getting over 200 million people on board.

Mobile money continues to be one of Airtel’s fastest-growing services, and an increasingly important part of its business, delivering $64.4 billion of annual transaction value and accounting for 11.7% of total revenue in the past financial year.

The payment service license will enable the company to expand its digital products and reach millions of Nigerians that do not have access to traditional financial services.

As an important milestone to support the shared agenda with the Nigerian government, the CBN, and traditional financial institutions, to further deepen financial inclusion in the country for the benefit of all citizens and the Nigerian economy.

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