In a move that will be regarded as a direct challenge to South Africa’s big banks, retailer Pick n Pay and mobile operator MTN have taken the wraps off a new, low-cost banking solution and free money transfer service that will be offered to consumers who sign up for a co-branded Sim card.
Consumers who get the Pick n Pay Sim will automatically receive 10% extra airtime when topping up at Pick n Pay or Boxer stores. They’ll also receive quarterly rewards in the form of airtime, data and Smart Shopper loyalty points when using MTN’s Mobile Money service to buy goods.
Banking through the new service is free of charge, with no monthly account fees and no transaction charges. Consumers can send and receive money through any active cellphone number in South Africa as well as deposit and withdraw cash at Pick n Pay and Boxer stores.
They can also buy prepaid airtime and electricity, pay for municipal services, and make payments into their Mobile Money accounts through electronic funds transfer. Anyone older than 16 can apply for the product.
As TechCentral reported on Monday, the companies have also announced a Mobile Money-branded Visa debit card, allowing them to spend money wherever Visa cards are accepted and to draw cash from ATMs.
The companies are using the banking licence of the South African Bank of Athens, through its Tyme distribution channel.
Pick n Pay deputy CEO Richard van Rensburg says the service is effectively offering consumers “a bank without a bank”.
Customers can deposit their salaries into the account and there is no minimum balance requirement.
People who sign up for the co-branded Sim card can use any of MTN’s available prepaid calling plans, including its new 79c/minute plan. All the company’s prepaid data offerings, including data bundles, are available.
“There is a price war developing in the market for airtime, which is fantastic for customers. We picked MTN because we thought they’d be aggressive in that price war,” says Van Rensburg. “With 10% back to customers, we don’t have to get involved in the price war. A customer with our Sim card will just get the new price, plus 10%.”
MTN South Africa CEO Zunaid Bulbulia claims this is the first time consumers can get a “fully Fica’d bank account without going into a bank”.
“This has the potential to transform the economy,” Bulbulia says. “This is the first time there will be a bank account with no monthly fees, no fees for swiping, and no need to have a minimum monthly balance. This is pretty compelling and has the potential to get the 8m unbanked people in South Africa [using financial services] more so than any other product.”
Bulbulia says MTN has drawn lessons from the mobile money services it has launched in other African countries. Key to success in this space is to have a good distribution channel, hence the mobile operator’s decision to partner with Pick n Pay. — © 2014 NewsCentral Media
