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    Home » In-depth » With M-Pesa, Vodacom takes aim at cellular rivals

    With M-Pesa, Vodacom takes aim at cellular rivals

    By Editor31 August 2010
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    Kenyan telecommunications operator Safaricom has increased its market share from about 60% three years ago to over 80% on the back of its M-Pesa cellphone money transfer service. Now Vodacom is hoping to emulate those market share gains in SA.

    That’s the word from Mark Taylor, newly appointed MD of Vodacom Payment Services, the company that houses the company’s M-Pesa offering.

    Vodacom and Nedbank — the latter holds the necessary banking licence — launched the M-Pesa service in SA on Tuesday. The cellular operator’s commercial director, Romeo Kumalo, says Vodacom’s target is to sign up 10m customers within three years.

    Taylor says the M-Pesa product will succeed where other cellphone-based money transfer systems have failed because it doesn’t require consumers to open a bank account. “Your cellphone number is your bank account,” says Taylor.

    There are an estimated 13m people in SA that are unbanked.

    “Our intention eventually is to get to every spaza shop and every tavern,” Taylor says. Vodacom is rolling out the service to 600 new outlets a day.

    He says Vodacom wants to emulate Safaricom’s success. If it’s successful in signing up 10m M-Pesa users, Taylor says this will have a marked impact on Vodacom’s market share and on levels of churn — the number of people switching away from Vodacom to other networks.

    Because it’s more expensive to send money to non-Vodacom customers — consumers must be on Vodacom to open an M-Pesa account — the hope is that MTN and Cell C customers will churn to Vodacom, pushing up its market share.

    “If we get to 10m users, that gives us more than 50% of our subscriber base,” Taylor says. “Then we will start to build enough traction that people will churn to us.”

    By facilitating the transfer of money into outlying parts of the country, it’s also expected that M-Pesa will give more people in outlying areas access to money, which they can then use to spend on cellular airtime, among other things.

    Kumalo says M-Pesa is an important product to launch in a cellular market that has become saturated. “It’s only by doing things like that that people will be loyal to the brand,” he says.  — Duncan McLeod, TechCentral

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