S.Africa's MTN launches money transfer service

South African mobile phone operator MTN launched a money transfer system for unbanked customers in Africa and the Middle East, aiming to boost subscriber loyalty and entice new users.

Africa's biggest mobile operator by subscribers said on Monday it signed a $9.7 million deal with Fundamo, a South Africa-based mobile banking and payment solutions group, to provide mobile banking facilities.

Only one in five African households in African has access to a bank account, according to the United Nations, but a much higher proportion have a mobile phone and many operators hope offering financial services will attract new customers.

The technology works like a mobile bank account, enabling MTN customers to make money transfers and payments.

Users will also have an option to receive a branded MTN MobileMoney debit card, which can be used to withdraw money.

"We are seeing huge demand for basic financial services such as money transfer," Dare Okoudjou, head of Mobilemoney International Development for MTN, told Reuters.

MTN's MobileMoney follows the success of M-PESA, a mobile money transfer service in Kenya offered by Safaricom, which has drawn more than 4 million users since its launch in March 2007.

Kuwaiti mobile phone firm Zain last month launched its mobile cash transfer service, Zap, in Kenya and Tanzania.

MTN has already launched MobileMoney in South Africa and Uganda and has piloted the service in Cameroon, Ghana, Cote d'Ivoire and Nigeria. It is now working on deploying the service in the Middle East, including in Afghanistan and Syria.

MTN expects the service to work well in Nigeria, where few of its 23.1 million customers have bank accounts. It is working with banking partners to comply with banking regulations.