Cellular network operator Vodacom may seek its own banking licence from SA regulators if its mobile transactions platform, M-Pesa, takes off in the way it expects it will in the next few years.
The operator has signed up about 100 000 M-Pesa customers since launch, but had been targeting 10m within three years. That target now looks unattainable, at least in the short to medium term.
Vodacom Group CEO Pieter Uys says it sought a partnership with a bank because it realised it could not launch M-Pesa in the timeframe it had set itself to bring the product to market. “It would not have been possible to get a licence [in that time].”
However, Uys suggests Vodacom may go its own way, particularly if M-Pesa takes off in a big way. “If we can make this thing work, we will rethink it,” he says. “We have a good partnership with Nedbank, [but we want to]start opening it up so you can transact with other banks.”
If M-Pesa gains strong traction in the SA market, he says Vodacom will consider applying to the Registrar of Banks for its own banking licence to give it “flexibility”.
Some commentators have suggested that Vodacom — and other mobile operators — should consider buying financial services institutions to give them expertise before mobile money takes off in a big way. But Uys says he’d rather recruit talent than make an acquisition.
“We have employed people who are not traditional telco people,” he says.
Uys tells TechCentral that M-Pesa has not met Vodacom’s early expectations and ascribes this to SA’s advanced banking infrastructure relative to countries such as Kenya and Tanzania, where M-Pesa has been much more successful. “In Kenya, there is nothing else.”
Vodacom plans to extend the “vanilla” system it has implemented based on the Kenyan M-Pesa platform. He envisages it being used for everything from government pension payments to allowing consumers to buy applications for their smartphones without the need for a credit card.
“There’s a lot of work left to do. Do I still believe in it? Yes.”
Uys says a new technology called near-field communications, or NFC, could play a pivotal role in helping telecommunications operators profit from mobile payments.
Companies such as Google, Nokia, Visa and MasterCard are all working at building NFC systems — a short-range wireless technology, not dissimilar to Bluetooth, that can be used to make electronic payments quickly and without hassle.
Financial services industry executives think the technology could eventually replace plastic cards and even cash. Uys says Vodacom will issue Sim cards with NFC technology built into them, for people who don’t have devices that support it.
But he concedes it’s still too early to know how the business model will work. Putting NFC readers at points of sale across the country will be an expensive exercise. “Will it take off? Definitely. But things change so quickly these days you can’t have a five-year plan anymore. Those days are over.” — Duncan McLeod, TechCentral