Vodacom aims for 10m M-Pesa users - TechCentral

Vodacom aims for 10m M-Pesa users

Romeo Kumalo

Vodacom expects to sign up 10m M-Pesa mobile money users within three years.

The telecommunications operator’s director in charge of the product’s launch, Romeo Kumalo, revealed the ambitious target during the product’s launch in Midrand, north of Johannesburg, on Tuesday.

The 10m target is particularly ambitious given that the total unbanked population in SA is not much higher than that, at 13m people.

Vodacom has launched the M-Pesa project, first pioneered by Safaricom in Kenya, in conjunction with Nedbank.

According to Vodacom Group CEO Pieter Uys, M-Pesa in Kenya accounts for more than half of all money transfers in the East African nation. The Kenyan service has 10m customers and Uys says he expects M-Pesa to “revolutionise” the way South Africans think about mobile technology and payments.

However, Vodacom and Nedbank are launching the service into a market that is already becoming crowded. Absa and Standard Bank (through its subsidiary Beyond Payments) have both launched similar services aimed at addressing the unbanked market. And MTN offers a similar service, MTN Money, in partnership with Standard Bank — though it hasn’t proved particularly successful.

Transaction fees for the service are relatively low: R2,45 to send money between registered M-Pesa users. However, sending money to non-M-Pesa users attracts a R10 fee. Withdrawing cash costs R6. There is no interest paid on positive cash balances.

Though M-Pesa users don’t have to go through the normal processes involved in opening a bank account, like supplying proof of residence, M-Pesa accounts are limited to R25 000 (for premium customers) and R5 000 for standard accounts.

To register for an M-Pesa account, consumers do have to present either an identity book or a passport. Asylum permits and refugee IDs are also accepted.

Consumers must have registered their Sim cards in terms of the Regulation of Interception of Communication Act before they can sign up for the M-Pesa service.

Vodacom has signed distribution agreements with Edcon (which owns Edgars and CNA), Pick n Pay, Boxer and Pep Stores. It has also signed deals with Blue Label Telecoms and Smartcom to offer M-Pesa, particularly in the rural areas. Users can withdraw cash from Nedbank’s 2 000 ATMs, and there are plans to offer the service through other banks, too.

For now, SA M-Pesa users can’t use the service to send money to M-Pesa users in other countries. However, Nedbank CEO Mike Brown says that’s the plan once the parties have found a way to work around SA’s onerous exchange control regulations. Brown emphasises that Nedbank has worked closely with the SA Reserve Bank and national treasury in launching the product.

He says “it’s clear” that Nedbank hopes to make money out of M-Pesa, despite the relatively low transaction fees. “This will bring more liquidity into Nedbank,” he says. “The real cash has to sit somewhere, and that’s a key part of our role in this environment.”

Ultimately, Brown says he hopes M-Pesa customers will migrate into the formal banking sector and that Nedbank will “receive more than the natural share of that migration”.  — Duncan McLeod, TechCentral

9 Comments

  1. The fees actually correlate pretty closely to the fee structure of M-PESA in Kenya. It does feel expensive for micro-payments though…

  2. @The_Librarian I concur. I far prefer the FNB eWallet approach – http://www.fnbweb.co.za/cbs/pricingguide/Personal/eWallet_e.asp – it costs R9 to put money into the system, but allows you to get the money out of ATMs free, and the other transacton costs are cheaper than M-Pesa. This helps take bank fees away from the people who can’t afford it. It’s a pet hate of mine that the poorest people in the country are screwed over the most by financial institutions. Before I helped my gardener find a proper account, he had about 15% of his salary disappearing each month in fees. The bank didn’t educate him to only use ABSA terminals, or point him in the direction of an account that gave him X free withdrawals a month. They just gave him the default rip-you-off-account.

    I fiddled around with the eWallet a bit when it came out, and it worked very well.

    I guess the technical/financial advantages of a system are irrelevant, this will all come down to who markets it the best, and M-Pesa has more fees in the chain of money movement, which means more people will make money, and promote it more.

  3. This will increase the cash and hold up exposure at outlets holding cash floats for transactions. Outlets will be easy targets for theft as they become almost mini-banks. Not sure that this has been well thought through.

  4. In your dreams 10m users. SA and Kenya are two completely different markets. SA banking infrastructure is way better thus their is less of a need to send money around. When Mpesa kenya launched the banked pop was 19%, Sa bank pop is sitting at around 60%.

  5. This will be an interesting experiment to see if a large marketing budget can con millions of people. Better services already exist a fraction of the price.
    = Pocit.mobi is very secure, allows for person-to-person payments for only 35c, allows for bill payments, and airtime purchases. It also works with all mobile networks and all banks.
    = FNB Ewallet is also better. Only problem is that it works well with FNB only.

  6. Very bold targets, particularly in a fragmented market. Can a system that only serves a portion of the population REALLY fly? Perhaps Vodacom, FNB, ABSA, Pocit etc… should get together to offer a single / interconnected system wherein ANYONE can transact with ANYONE.

  7. AFRICAN PAYPOINT SYSTEMS on

    I agree DAR, very bold indeed. Dont know if this is innovative. MOJA-SACT to be launched in January 2011 will be way much better putting an end to the likely marriage between Banks & MOBILE networks. Once again Customer will be King.

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