On May 24, 2022, barely a week after its highly anticipated commercial launch, MTN MoMo’s Payment Service Bank in Nigeria encountered a severe system anomaly. Operations detected an extraordinary volume of unauthorized transactions, not due to a system crash, but a malfunction processing hundreds of thousands of transactions without proper instruction or approval. The speed and scale of these events made manual intervention impossible.

The financial fallout was staggering: ₦22,300,000,000 (22.3 billion Naira) was erroneously transferred from MTN MoMo’s accounts into approximately 8,000 customer accounts across 18 commercial banks. These transfers were later described in court filings as a “system glitch” and not the result of a conventional hack or external breach. A total of 700,000 transactions were processed without authorization.

MTN MoMo, which had just received its final CBN approval in May 2022, represented a significant strategic move for MTN Nigeria, the country's largest telco, into the mobile money market. The PSB was established with the core mission of bringing millions of unbanked Nigerians into the financial system, making the timing and nature of this incident particularly critical.

In response to the detected anomaly, MTN MoMo took immediate action, shutting down its service on May 25, one day after the glitch was identified. While operations resumed within roughly 24 hours, the funds had already been distributed across a vast network of institutions and accounts, including some belonging to customers who received the unexpected credits unknowingly.

The recovery process was complicated by legal and ethical considerations. The 18 commercial banks involved faced an awkward dilemma: reversing transfers into customer accounts without legal authority could expose them to liability. Consequently, most banks required either the customer’s explicit consent or a court order to reclaim the funds.

To address this, MTN MoMo filed a lawsuit at the Federal High Court in Lagos on May 30, 2022, under case number FHC/L/CS/960/2022. The originating summons and supporting affidavit, sworn to by CEO Anthony Usoro Usoro, named all 18 commercial banks, including prominent institutions like Access, Zenith, GTBank, First Bank, and UBA. The suit sought declarations that the erroneously transferred funds belonged to MTN MoMo and requested orders compelling the banks to return remaining amounts and account for any funds already withdrawn or spent by recipients.

A significant challenge in recovery arose from the period between May 24 and May 30, before the court order was issued. Many recipients, upon receiving an unexpected credit, had already spent the money. In such cases, recovery became more complex, requiring individuals to have available funds to return, which was often not the reality.

MTN MoMo’s 2022 financial disclosures reflected a loss of over ₦10 billion, specifically attributed to these “unauthorised transfers caused by a system glitch,” with the initial reported figure around ₦10.5 billion. Recovery efforts continued beyond the fiscal year. By early 2024, MTN had managed to claw back ₦12.5 billion of the original ₦22.3 billion. The remaining balance, estimated between ₦9.5 and ₦10 billion, was absorbed as a loss and fully provisioned for under a shared services agreement with MTN Nigeria.

The MTN MoMo incident, despite its substantial financial and operational implications, has not received the sustained scrutiny it warrants. It prompts critical questions regarding the adequacy of pre-launch stress testing within the CBN’s Payment Service Bank framework, the liability chain when a licensed PSB erroneously distributes funds requiring multi-institutional judicial intervention, and the broader implications for the promise of financial inclusion when the underlying infrastructure can experience such a significant failure.