M-Pesa lands in South Africa

South Africa’s largest mobile phone operator Vodacom has teamed up with Nedbank to unveil an M-Pesa mobile-based cash transfer service, similar to the successful on operating in Kenya.

The service was developed by Britain’s Vodafone, the majority shareholder in Vodacom, and part owner of Kenya’s Safaricom.

The product - available in Tanzania and Afghanistan - allows users to transfer money from person to person using a mobile phone.

It will initially allow users without access to bank accounts to transfer money using handsets and eventually pay bills and buy goods.

Vodacom plans to replicate M-Pesa’s success in Kenya to the continent’s richest country in a move targeting about 13 million unbanked South Africans.

In Kenya, M-Pesa as a value added service has helped Safaricom to increase its market share from about 60 per cent three years ago to over 80 per cent.

Mr Mark Taylor, the newly appointed MD of Vodacom Payment Services, the company that houses M-Pesa offering hopes to emulate those market share gains in SA.

“There are other cellphone banking products and money transfer services out there, but there quite simply is nothing like M-PESA.

‘‘The beauty of this service is the ease and speed with which people can send money to each other anywhere in the country,” said Mr Pieter Uys, Vodacom Group CEO in a statement.

Vodacom’s commercial director Romeo Kumalo says the telecom’s target is to sign up 10 million customers within three years.

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

In Kenya and Tanzania M-Pesa has been extended to allow customers to pay for school fees, insurance premiums and to put money into savings accounts.

“In South Africa, cell phone penetration is extremely high, and yet it is estimated that more than 13 million economically active South Africans do not have a bank account,” said Mr Mike Brown, Nedbanks’ chief executive.

Customers there can also receive payments such as salaries and dividends.

In July alone, about 1.7 million new M-Pesa subscriptions in Kenya were recorded.

According to the latest figures from Safaricom, the number of clients on M-Pesa has grown by 61 per cent from 7.38 million as of July 2010 to 11.89 million the same period last year.

Up to the end of last month, the service had transferred Sh525.84 billion since its inception in 2007 and the monthly average of money moved through the system has increased by 30 per cent.

Importing innovations

The service facilitated the transfer of Sh33 billion last month, compared to Sh20 billion in July last year. There were 19,500 agents as at the month of July.

While in the country recently, the US Under Secretary of State for Public Diplomacy and Public Affairs Judith McHale said that her country will leverage its technology by importing innovations from Africa as part of the Obama Administration’s bid to strengthen relations with the continent.

Citing the M-Pesa evolution, Ms McHale said her country’s economy could benefit by importing the revolutionary mobile money transfer system from Kenya.