By Mark Kawalya
MTN has introduced an overdraft service dubbed MoMoAdvance that makes it possible for MTN clients to access Mobile Money (MoMo) funds on credit to complete their transactions and repay later on.
The service can be used by all MTN MoMo customers and was launched after a successful pilot involving 135,000 subscribers that has been running since December 2020.
To qualify for the service, MTN MoMo customers must have been registered on Mobile Money for at least six months and have passed a credit score threshold based on their usage of Mobile Money and other MTN services. The service is also available to Mobile Money Agents, MTN MoMo corporate users, SMEs and merchants.
The MoMoAdvance can be used to buy airtime, send Mobile Money, pay for goods, make bundle purchases and pay bills such as TV subscriptions, electricity and water.
During the launch of MTN MoMoAdvance, the General Manager of MTN Mobile Financial Services Stephen Mutana said that the new service will give MTN customers the power to make transactions that are not limited to their MoMo wallet balance and make repayments later on.
“MTN MoMoAdvance is a product that we have been working on for some time with our partners from NCBA Bank. We are happy to finally roll it out to all our customers and we believe that it will give them the convenience to transact seamlessly beyond their wallet balances during times of need and pay back later, ” Mutana said.
He further added that the facility will be a workaround to the issue of insufficient Mobile Money funds that many customers face, especially during emergency times such as when their prepaid electricity runs out in the middle of the night.
MTN subscribers can activate MoMoAdvance by performing a one-time registration using the MyMTN app. Alternatively, they can dial *165*5*3# and accept the terms and conditions of the service by entering their mobile money PIN. After they have been vetted and approved, the customer can apply for overdrafts within their credit limit. The credit limit increases at a rate that is commensurate to the client’s repayment performance.
“I encourage all customers to continue actively using MTN services such as MTN MoMo, Data, and Voice which improve their credit score over time,” Mutana said.
To differentiate MoMoAdvance from MTN’s existing loan facility, MoKash, Mutana explained that while MoKash limits customers to borrowing money within their credit limit with a 30 day payback period, MoMoAdvance is an overdraft facility that enables clients to use money that is more than what they have in their Mobile Money account, and the repayment is automatically deducted when funds are received on their account.
A one-time access fee of 2.75% of the overdraft amount, along with a daily interest of 0.5% on the outstanding overdraft balance, is charged. The daily interest charge is effective for the period that the overdraft remains outstanding, up to a maximum period of 45 days.