Vodacom South Africa has announced it is pulling the plug on its struggling mobile payments platform M-Pesa.
Despite the enormous success of M-Pesa in markets such as Kenya (where it was pioneered by Vodacom sister company Safaricom) and in Tanzania, the platform has never taken off in the local market.
“Following a thorough review, Vodacom will discontinue its M-Pesa product in South Africa with effect from 30 June 2016,” the company said on Monday, a week ahead of the publication of its annual financial results.
Explaining the decision, Vodacom CEO Shameel Joosub said that the “business sustainability of M-Pesa is predicated on achieving a critical mass of users”.
“Based on our revised projections and high levels of financial inclusion in South Africa, there is little prospect of the M-Pesa product achieving this in its current format in the [medium]term,” he said.
“In other markets where financial inclusion is limited and where there is a more supportive macro environment, M-Pesa continues to gain solid traction based on exponential growth in customer acquisition. Kenya and Tanzania are prime examples of this,” Joosub said.
Vodacom emphasised that the decision does not affect M-Pesa customers in Tanzania, Lesotho, Mozambique and the Democratic Republic of Congo.
Joosub said Vodacom will work to mitigate any inconvenience to customers affected by the decision. M-Pesa customers’ funds remain safe and readily accessible, he added. “We remain of the opinion that opportunities exist in the financial services environment and we will continue to explore these.” — © 2016 NewsCentral Media