Frontier Fintech GPS# 34 - May 28th 2025
MTN Launches MoMoPay to digitise merchant payments in SA, Crypto Exchanges increasingly turn to B2B payments, M-Pesa expands credit offering and other stories that matter.
Illustration by Mary Mogoi
Hi All, Welcome to the 34th edition of Frontier Fintech GPS where I provide key insights on the top global Fintech news items that matter to you. This newsletter will be arriving in your inboxes every Wednesday morning. The idea behind Frontier Fintech GPS is to help you navigate the endless stream of Fintech news and get smart about global Fintech as it applies to Africa. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀
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🇿🇦 MTN Launches MoMo Pay to Digitize Informal Sector Payments
MTN South Africa introduced MoMo Pay, a digital payment platform targeting informal merchants, with a 0.5% transaction fee. It allows instant payments via QR code, merchant ID, or payment request, and enables merchants to sell airtime, electricity, and transport tickets for commission. Over 95% of South Africa’s informal sector transactions are cash-based, exposing traders to theft and limiting credit access. MoMo Pay aims to digitize these transactions, integrating informal businesses into the formal economy. With 13 million registered MoMo users, MTN leverages its mobile network for rapid adoption in townships, rural areas, and urban centers. The platform eliminates paperwork and registration fees, requiring only a smartphone. This move intensifies competition with banks, fintechs like Yoco, and social media giants in South Africa’s payments market.
I did an interview a few weeks ago with Kiaan of Stitch where he walked us through how both MoMo and Capitec Pay are making in-roads in South Africa. I’ve always argued that Mobile Money is native to Africa due to its inherently lower CAC than other models. It’s no surprise that MTN MoMo is doing well in South Africa. Demographically, SA looks like the rest of Africa particularly when you look at lower income segments. There’s no reason why MoMo shouldn’t thrive there.
🇳🇬Crypto exchanges target B2B payments to expand market share
Nigerian crypto exchanges Quidax, Yellow Card, and Busha are prioritizing B2B crypto payment solutions to meet growing demand from African fintechs. These companies, leveraging their API services, enable businesses to integrate crypto payments without regulatory burdens or blockchain expertise. Quidax and Busha secured provisional licenses from Nigeria’s SEC in August 2024 under the Accelerated Regulatory Incubation Programme, providing regulatory cover for clients. Yellow Card, operating in 20 African countries, supports multiple fiat currencies and counts Coinbase as a client. The APIs offer liquidity and compliance checks, including KYC and AML standards. This shift targets stable, scalable growth in Nigeria’s crypto market, where regulatory clarity is fostering innovation. The move positions these startups to compete in Africa’s expanding digital payments landscape
Increasingly, most Crypto trading companies in Africa especially ex-SA are turning into stablecoin based cross-border payments as their core business. There’s incredible demand and every player seems to be growing at dizzying rates. YellowCard seems to have completely rebranded into a B2B stablecoin player as per their new website. The industry is in-flux and it’s yet to be clear who the winners will be. The competition right now is largely on relationships and pricing with each of the players in Nigeria especially carving out a niche within specific segments e.g. Oil &Gas, Airlines and other key industries. Most players in the long-term argue that compliance will be the key competitive driver. Whilst regulatory compliance will matter, business is always won on distribution, price or product and rarely on compliance. At core, the people who make Stablecoins invisible and provide their customers with the most utility will win. This will mean plugging Stablecoins into the rest of the finance stack.
🇰🇪 Safaricom expands M-PESA credit offerings for SMEs
Safaricom, Kenya’s largest telco, launched overdraft and short-term loan products for SMEs via M-PESA, offering up to $3,089 (KES 400,000). Fuliza Biashara provides overdrafts from KES 1,000 (US$ 7.7) to KES 400,000 (3,089), while Taasi Till offers loans from KES 1,500 (US$ 11.6) to KES 250,000 (1,934) accessible through the M-PESA Business App or USSD *234#. Eligible merchants must have active tills for over six months. The initiative targets Kenya’s cash-strapped SMEs, addressing a 16% loan default rate and high bank lending rates.
This product is being launched in partnership with local banks so it’s a general ecosystem play by both Safaricom and the banks. It’s a very valuable service for businesses in the country and it should go a long way to drive merchant retention by Safaricom given that B2B is now their fastest growing segment. Overall, the SME play in Africa is a large opportunity and SME credit will always have a role to play. Nonetheless, like I’ve always argued, SME’s that do US$ 5,000+ per month in revenue will always need a more comprehensive solution given that M-Pesa is not their sole source of collections. I argued in a recent article that unifying SME payments data should be a focus for Fintechs particularly PSPs. Don’t have a strong opinion on how SME’s collect payments, rather, have an opinion on how they manage their treasury and payments ops.
🇰🇪Watu Holdings' profits decline 85% amid rising loan defaults
Watu Holdings, a Kenyan buy-now-pay-later company, reported an 84% profit drop to $1.2 million (KES 157 million) in 2024, down from $7.6 million (KES 985 million) in 2023, as disclosed by Car & General, which holds a 29% stake. The decline stems from rising loan defaults and worsening repayment behavior in Kenya, Uganda, and Sierra Leone, where Watu lends to informal transport operators, mainly boda boda riders. In contrast, its Tanzanian subsidiary, Watu Tuu Limited, saw profits nearly double to $5 million. The company’s exposure to income shocks and currency fluctuations highlights vulnerabilities in its asset-backed microcredit model. This downturn signals challenges for Kenya’s informal sector amid increasing borrowing costs and regulatory gaps in the BNPL market.
Watu is a real success story in African Fintech. Without much fanfare, Andris and his team has built a formidable truly Pan-African business that is making money. That their Kenyan profits dropped by 84% is just reflective of a down-turn in the Kenyan economy that is arguably in its third year. At core, Africa has a credit deficit particularly when you think of the average citizen and their access to productive capital. This will remain true so long as median ages in Africa are sub 30. The challenge is building a lending model that balances the demand for sustainable lending (right pricing) and return on capital. For Watu, revenue diversification must be a core goal because in finance, long-term resilience is tied at the hip with balance sheet and revenue diversification.
🇺🇸 Major U.S. banks explore joint stablecoin initiative
JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are in early discussions to issue a joint stablecoin to enhance transaction speeds and counter competition from crypto firms. The initiative involves co-owned entities like Early Warning Services (operator of Zelle) and Clearing House (real-time payment network). The stablecoin aims to leverage blockchain for efficient, secure digital payments. The move responds to growing fintech and crypto pressure, including World Liberty Financial’s stablecoin plans. The GENIUS Act’s Senate approval signals regulatory support. The banks' collaboration reflects a strategic response to the growing adoption of stablecoins and the need for regulated digital payment solutions. If implemented, the joint stablecoin could offer a standardized, bank-backed digital currency, potentially influencing the structure of digital financial services and prompting further regulatory developments in the sector.
This is not surprising at all. Banks across the world have been issuing digital currency for years in the form of bank deposits. At core, these are digital records of value with the Central Bank ensuring the singleness of money. Stablecoins are an extension of this just that they are transacted on the blockchain. The most logical thing for banks to do is to issue a single stablecoin to ensure there’s no replication of efforts and its also useful for ensuring there’s no concentration risk. If you push this logic to the next level, the Central Bank may be involved in monitoring the reserves. If you take it one step further, you’re not far away from a CBDC. I keep arguing this but people in the Stable community don’t like to hear it.
🇰🇪 Government plans partial sale of Safaricom stake to raise KES 149 billion
Kenya’s National Treasury intends to sell part of its 34.9% stake in Safaricom, valued at $2.1 billion (KES 280.5 billion), to raise KES 149 billion ($1.16 billion) by June 2026. The sale, part of a broader privatization push, aims to address fiscal pressures without new taxes. The government previously sold a 25% stake in Safaricom via a 2008 IPO. The transaction may attract Africa-focused investors seeking stable telecom assets. A reduced government stake could spur private investment and innovation but may shift regulatory dynamics. The move underscores Kenya’s strategy to leverage Safaricom’s profitability to ease budget constraints.
There’s a Buffett saying somewhere that goes “if you buy things you don’t need, you’ll soon sell things you need”. At core this is the issue. Almost a decade of fiscal mismanagement in Kenya has led the government to the point where they need to sell shares in Safaricom to finance a budget deficit. Safaricom has been a source of steady dividends to the exchequer for years. That being said, the main issue is that the percentage of shares to be sold is not expected to be so high that the government loses its relevance from a board and decision making perspective.
🇿🇦 Pepkor dominates prepaid cellphone market with 30 million SIMs
Pepkor Holdings, through its PEP stores, sells 80% of South Africa’s prepaid cellphones, with 65% being smartphones, per its interim results for the six months ending March 2025. The group sold 6.8 million handsets, a 17% increase, boosting profits to R5.8 billion. Its FoneYam smartphone rental service has enabled 1.5 million customers to access affordable devices, addressing cost barriers. Pepkor’s fintech arm, Flash, grew transaction throughput by 23.6% to R28.8 billion, supporting 175,000 informal traders. This dominance highlights Pepkor’s role in bridging the digital divide and strengthening the informal economy. The surge in sales intensifies competition with traditional telecom retailers like Vodacom and MTN.
This story validates that physical distribution will always be relevant in Africa. Pep has leveraged their traditional strengths in building a distribution system targeted at low income South Africans to become a key player in phone finance and payments through Flash. This story echoes in the success of TymeBank and Moniepoint and MTN, Vodacom and Safaricom a generation earlier.
🇺🇸House passes 3.5% remittance tax on non-citizens
The U.S. House of Representatives passed the One Big Beautiful Bill Act on May 22, 2025, including a 3.5% excise tax on remittances sent by non-U.S. citizens, reduced from a proposed 5%. Effective January 1, 2026, the tax targets non-citizens, including visa and green card holders, and is expected to generate $22 billion from 2026 to 2034. India, receiving $32.9 billion in U.S. remittances in 2023-24, faces a potential $1.15 billion annual cost. The tax may reduce remittance flows to countries like Mexico, India, and Guatemala, impacting their economies. Critics warn of shifts to informal channels and economic strain on migrant-dependent regions. The bill awaits Senate approval to become law.
I was speaking to an executive in the remittance space last week and he mentioned that according to him, the biggest risk he saw in the business was the then proposed 5% tax on remittances. Whilst this has since been reduced to 3.5%, it doesn’t make it less of a risk for the entire industry. At the core of it is businesses that have built their entire business case around regulatory compliance now being slapped with a 3.5% tax. What this will lead to is a move to Stables given that it is effectively just “buying crypto”. One can argue that you can always get a US citizen to do the payment for you, but the coordination at scale required for this to be the dominant method of sending money home is too much. People will just move to Stables and a lot of that remittance inflow may move away from banks into crypto companies with the attendant consequences from an FX perspective. The tax is not likely to be reduced given that the US has a massive fiscal hole that needs plugging.
🇳🇬Carrot Credit secures $4.2M to expand asset-backed lending across Africa
Carrot Credit, a Nigerian fintech, secured $4.2 million in seed funding led by MaC Venture Capital, with Partech Africa and Authentic Ventures, to scale its platform offering loans backed by digital assets like stocks, ETFs, and crypto. Founded in 2023, the startup enables users to borrow without selling investments, using a B2B2C model integrated with fintechs and brokerages. It has disbursed over $2 million in loans to 10,000+ users with flexible repayment terms and below-market interest rates. The funding will expand credit infrastructure and team capacity across Africa. This move taps into Nigeria’s growing digital investment market, enhancing financial inclusion and competing with traditional lenders.
This needs to be seen in the broader context of what’s happening in Crypto and Tokenisation in general. Kraken recently announced a product where they are offering tokenised stocks to their clients. In Dubai, they’re tokenising real estate. There is a trend towards enabling widespread and global access to both crypto and US stocks. Layering lending on this is a logical extension of this global financialization. Carrot Credit are therefore on to something. Nonetheless, a successful credit business is largely built on; access to low cost funding, unique credit scoring, a customer acquisition advantage and strong collections. What Carrot is offering is a capability that can be plugged into a larger consumer fintech or bank and not necessarily a stand-alone business in my view.
🇺🇸Circle targets $6.7B valuation in U.S. IPO amid crypto market resurgence
Circle Internet, issuer of the USDC stablecoin, plans to raise up to $624 million through a U.S. IPO, targeting a $6.71 billion valuation. The company will sell 9.6 million shares, with existing shareholders, including Accel and General Catalyst, offloading 14.4 million shares at $24–$26 each. The IPO, led by J.P. Morgan, Citigroup, and Goldman Sachs, will list Circle on the NYSE under the ticker “CRCL”. This follows a failed $9 billion SPAC deal in 2022 and reflects growing crypto market optimism, bolstered by supportive U.S. regulatory shifts. The move strengthens Circle’s position in the $60 billion USDC market, enhancing competition with Tether and expanding stablecoin adoption in digital payments.
Some weeks back I argued that Circle’s dalliance with Ripple for an acquisition was largely a market signalling tactic to show the base price for the IPO. The proposed bid was US$ 5b and so its not surprising that the final IPO price has come slightly above that. I nonetheless wonder what Circle’s long-term advantage is;
Companies like Bridge and BVNK seem to have figured out the orchestration layer;
Coinbase and Fireblocks have carved out their niches in distribution and wallet tech respectively;
Tether has achieved ubiquity through distribution in the emerging world, arguably where there’s strongest demand;
Banks are looking to launch their own Stables;
I struggle to accept that a business which generates 98-99% of their revenue from interest income is a strong bet in such a dynamic market.