The Cold War continues as MTN’s MoMo accuses 18 Nigerian banks of $53 million mobile money fraud

The Cold War continues as MTN’s MoMo accuses 18 Nigerian banks of $53 million mobile money fraud

Fintech arm of telecom giant, MTN MoMo has reportedly sued 18 Nigerian commercial banks for $53.7 million mobile money fraud. Access Bank, Ecobank, Fidelity Bank, FirstBank, First City Monument Bank, Guaranty Trust Bank, Heritage Bank, Polaris Bank, Providus Bank, Stanbic IBTC, Standard Chartered, Sterling Bank, SunTrust Bank, Union Bank, United Bank for Africa, Unity Bank, Wema Bank, and Zenith Bank are the affected banks.

In the suit, Chief Executive Officer of MoMo PSB, Anthony Usoro Usoro claimed that it has suffered a fraudulent loss from its partner banks. MTN claims that the amount was transferred in error to 8,000 accounts maintained by the 18 banks’ customers. Usoro also asserted that the fraud was committed over a total of 700,000 transactions, over a one-month period. MoMo PSB apparently shut down its service on May 24 after becoming aware of the fraud to limit future exposure.

“The transfers were due to the fact that the plaintiff suffered system exploitation which led to the said debits. There is no transaction between the plaintiff [MoMo PSB] and the recipient account holders that warranted the transfer of the funds to those accounts,” Usoro said.

In response to the banks’ argument that only court orders could initiate action for reversal, the CEO also said that it was turning to legal action.

Usoro Anthony Usoro

“By virtue of the provisions of the CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services, made pursuant to sections 2(D), 33(1)6) And 47(2) of the CBN Act 2007 the plaintiff is entitled to a return of its money and the provision of the information which it requires from the defendants,” the suit read.

What is Pulling the MoMo Cold war?

Payment service providers augment a bank’s acquiring skills in a collaborative environment. Payment providers ensure that users receive specialized service. They prepared to answer any queries or complaints, saving their partner time and money.

Using a cooperative partnership model, banks and payment service providers should complement each other. However, this has not been the case between commercial banks in Nigeria and MTN Nigeria’s fintech subsidiary,  MoMo Payment Service Bank. Upon gaining approval from the Central Bank of Nigeria to run a payment service bank, MTN could carry out in-house financial transactions on behalf of their clients and issue settlements.

The inability of MoMo and Nigerian commercial banks to collaborate has been a concern in Nigeria’s financial space. For better understanding, payment service providers offer technologically sophisticated banking channels tailored towards meeting users’ needs efficiently. MoMo’s licence has now expanded its capabilities, putting it into direct contention with banks.

MoMo designs specific technology solutions in line with client needs, appealing to consumers’ convenience, flexibility, and client-oriented approach. It is presently not clear what is true on the accusations. However, MoMo and banks haven’t found the means to collaborate yet, and if they can’t co-exist, more issues are coming.