• MTN has launched a new feature of its mobile money platform that allows merchants to make sales just with their smartphones.
• Using the app, merchants can also now sell airtime, Lotto tickets and more.
• MTN says it will be taking a 0.5 percent cut from each transaction.

As MTN’s mobile money platform MoMo gains traction with more than 13 million registered users, the telecom’s fintech arm has now added a new digital payment solution for informal merchants and traders.

Called MoMo Pay, entrepreneuers can now accept payments instantly using their smartphones and the MoMo app through QR codes, merchant ID or payment request, eliminating the need for cash or pay point technology. MTN will however incur a 0.5 percent transaction fee from the merchant, so for every R200 purchase, you will be giving R1 to Big Yellow.

MoMo Pay goes beyond accepting payments, however, and can now even sell airtime, data, prepaid electricity, DStv subscriptions, Lotto, bus tickets and more right from the app. The added options allow even the smallest spaza shop vendors to extend their catalogue of products just by using a smartphone.

MTN of course, gets a small percentage of the transactions, and the vendor will also make a commission.

“For example, an airtime vendor will earn a commission per sale, turning every phone recharge into a recurring revenue stream,” the telecom explains.

“With MoMo Pay, we’re not just digitising payments – we’re unlocking a pathway to financial dignity and scalable opportunity for every vendor, spaza shop, and street trader,” said Kagiso Mothibi, CEO of Fintech at MTN South Africa.

“We’ve designed MoMo Pay to be radically accessible,” he adds. “There’s no paperwork burden, no tech complexity – just a smartphone and a vision to grow.”

MTN wants its MoMo fintech to be the cornerstone of the kasi economy

MTN says that the longer term plan will be to turn MoMo Pay into a fintech ecosystem serving informal economies across South Africa, earning tiny cuts with each use. While the 0.5 percent commission may seem tiny, MTN is looking towards its rival Safaricom and its M-PESA model for potential profits.

Safaricom sometimes makes just a few cents per single usage of M-PESA in Kenya as Kenyans use the platform to quickly send money to each other. But the profits come in volume. Millions of Kenyans use M-PESA daily, translating to a constant stream of revenue in the millions of dollars.

M-PESA continues to be Safaricom’s golden ticket, especially now as it has been rolled out in markets like Ethiopia which previously had no mobile digital payment options and have a huge unbanked population. Potentially a recipe for success.

MTN says MoMo’s ambitions extend far beyond payments.”

“The platform is laying the foundation for a full-spectrum digital financial ecosystem one where merchants can access microloans, build savings, insure their operations, and ultimately participate more fully in the formal economy,” it explains.

“As more merchants join the platform, the network effect grows, creating a vibrant, hyperlocal commerce engine.”