Airtel, MTN, others earn big from “borrow now pay later” services

Telecommunication giants MTN and Airtel Nigeria reported massive growth in their airtime credit businesses otherwise termed ‘borrow now, pay later” services, according to their annual report for the quarter ended June 2021.

Nigeria’s growing youth population has become the focus for quick loan schemes with businesses exploiting the huge demand for easy credit and the temptation it provides for their customers, to boost topline revenues.

While MTN Nigeria reported a massive 69.6 percent growth in its Fintech segment which comprises its MoMo Agency business and its Xtratime airtime credit service business, translating to N31.6 billion in the first half of 2021, Airtel earned close to $36 million from this segment.

MTN also reported that revenue from Xtratime makes up about 95 per cent of revenue from its FinTech segment. Airtel reported strong numbers during the quarter with its airtime credit services revenue from Nigeria rising by a whopping 70.9 per cent year on year.

Both companies lead in the airtime credit services space.

For utilities like Airtel and MTN, the business model is enabled by the near guarantee that the customers will make repeat calls, thus ensuring that airtime borrowed will be subsequently repaid.

Airtel calls its service “Extra Credit,” Globacom “Borrow me credit,” MTN “Xtratime,” and 9 Mobile “MoreCredit.” The big telcos charge as much as 15 per cent per amount borrowed for small amounts starting from as small as N25 to as high as N5,000.

The more you borrow and repay the higher your credit limit and the higher the amount borrowed on your next request the higher your chances of attaining a higher credit limit.