MIP Holdings, an independent software development house based in Johannesburg, has acquired Stellenbosch-based Itemate Solutions for an undisclosed sum. It hopes the deal will give it access to Africa’s vast unbanked market by allowing it to merge financial services and cellphone technology.

“The proliferation of wireless technology is going to transform the mobile device from being just a phone and camera to a device that replaces one’s entire physical wallet with digital forms of credit cards, insurance policies, loans, identification documents and location services,” says MIP CEO Richard Firth.

Itemate was formed in 2005 and its software solutions track the lifecycle of mobile prepaid Sim cards or prepaid vouchers.

“The vast majority of cellular subscribers around the world use prepaid,” says Itemate CEO Mark Parker. “The figure is as high as 90% in developing countries, but these cellular subscribers are by and large untracked. We allow cellular companies to track subscribers via their Sim and prepaid phone cards from the time they buy airtime until it has been used, or not used.”

Itemate allows operators to track and report on deferred revenue. This unearned income is the credit a user has loaded from a prepaid voucher onto their Sim card, but hasn’t yet used. Parker says it’s the cellular equivalent of “reserves in banks”.

“Our product tracks deferred revenue and it can be factored into a cellular operator’s revenue stream, making it a valued product from an accounting perspective,” he says.

Itemate’s products are already used by companies such as MTN, Orange, Telecel and Tigo.

Areas MIP will target through the acquisition of the company include treasury management, microloans, micro-insurance, funeral policies, stokvel investment schemes and micro-investments.

Itemate, meanwhile, will use MIP to target regions such as South America, South-East Asia and the Indian subcontinent.

Parker says the greatest obstacles facing operators are “declining average revenue per user (Arpu) and high churn rates. We want to use loyalty products to reduce churn and increase Arpu.”

Itemate integrates fully with other applications, such as products from Fundamo – recently acquired by Visa – and Firth says Itemate is the “glue to unite other platforms”. Itemate will continue to run autonomously.

Parker says the deal with MIP will allow Itemate to target “the great unbanked”.

“MTN has 141m subscribers. The question we’re asking is how we get services to them,” he says. “Cellphones are the answer right now, and smartphones will be the answer going forward. Phones are now ‘talk and transact’ devices.” — Craig Wilson, TechCentral