MTN finds a way to join PayShap

MTN SA, in partnership with Investec and Electrum, has become the first nonbanking company to join the PayShap digital payments platform through its MoMo mobile money unit.

Together with the Payments Association of SA, BankservAfrica in 2023 launched PayShap, offering consumers cheap access to instant payments across participating banks via a cellphone number.

Having initially launched with Absa, FNB, Nedbank and Standard Bank, the service expanded to include Capitec, Investec, Discovery Bank, Sasfin, TymeBank and African Bank.

Even as financial technology continues to be one of the big areas of innovation and technology investment in Africa, PayShap is open only to banks. But MTN has found a way to participate in the payments system.

“This is a three-party perfect partnership,” Bradwin Roper, CEO of fintech at MTN SA, told Business Day. 

“Electrum is our technology provider. They get a win. [For] any fintech [business], the secret sauce is getting an easy, slick and cheap way to have your platform funded. So we win. The fees on PayShap are, arguably, less than half of what we would normally be paying for money coming into MoMo.”

That’s another win for SA’s second-biggest mobile operator.

“And then you need a banking partner to register your proxy into Bankserv and that is Investec. They have found a commercial model to make that work. So everybody wins,” said Roper.

“Finding the right technology partner and banking partner is how we got in,” he said.

Earlier this year, BankservAfrica reported that the first year of the PayShap operation saw more than 14-million transactions from March 13 2023 to February 29, with a settlement value of more than R9bn.

The clearing house says the platform promotes “instant, convenient, easy and safe payments” within a transaction limit of R3,000. More than 2.5-million users have opted into using a ShapID identifier, such as a mobile phone number, which does away with requiring the beneficiary’s bank account details.

Nevertheless, Roper said getting to this point was not easy. “We had to find ourselves legally and commercially. But what has united all of us is trying to make a meaningful impact to the base of the pyramid customer.”

African Bank remains the sponsor bank for MTN’s mobile wallet platform. The bank is a member of PayShap though it does not sponsor on a commercial level, which explains the mobile operator’s move to work with Investec, the only lender now with that capability.

Electrum specialises in enterprise solutions for payments and digital goods and services, working with banks, retailers, telecom operators and insurers. 

“My first port of call was Electrum, the technology provider. They’re a powerhouse in VAS [valued-added services] and payments, especially digital and cloud-based payments,” said Roper. “We’ve partnered with them as a joint venture in the tech stack between our technical people and theirs. The real magic happens in that technical build.” 

VAS typically includes the sale of products such as airtime and electricity. 

MTN hasn’t shied away from partnerships to push its financial services ambitions. It is also working with Cape Town-based fintech operator ClickSendNow on its international remittances service. In addition, the mobile operator has a partnership with Sanlam for its insurance offering, called aYo. 

The development comes a few months after Mastercard bought a 3.8% stake in MTN’s fintech business for R5.2bn. The deal is seen as a nod to the growth and prominence of the broader fintech landscape in SA and the rest of the continent. It values MTN’s fintech unit at R100bn. 

gavazam@businesslive.co.za