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