Mobile money transfer facility M-Pesa is in for an international boost, following an agreement between Vodafone and MoneyGram. The deal will see consumers being able to transfer funds from 200 countries to the over 15 million M-Pesa users worldwide.
Nasdaq-listed global payment services company MoneyGram says the agreement with Vodacom's parent company will allow customers visiting MoneyGram's 334 000 agents across the globe to send funds directly to M-Pesa accounts. "This service will be launched in key markets during the second quarter of 2014, with additional rollout planned throughout the remainder of the year."
M-Pesa is currently available to cellphone users in SA, Kenya, Tanzania, Mozambique, Lesotho, the Democratic Republic of Congo (DRC), Egypt, Fiji and India - with more markets set to launch the product this year.
Banking the unbanked
Developed by Vodafone and launched in 2007, M-Pesa enables unbanked customers to buy airtime (a prevalent use in SA), pay bills and withdraw, transfer and deposit money using a cellphone.
In 2012, the World Bank estimated more than half of all inhabitants in the countries in which M-Pesa was available did not have access to a traditional bank account. In August, managing executive for mobile commerce at Vodacom Herman Singh said an estimated 13 million people in SA were unbanked, under-banked or unhappily banked.
Director of M-Pesa at Vodafone Michael Joseph says an estimated $90 billion per year is transferred to M-Pesa markets from around the world. "There is huge demand for sending funds back to family and friends in your home market. Our partnership with MoneyGram provides the most extensive global network and greatest number of access points for consumers wishing to transfer funds to M-Pesa users."
As of 30 September last year, M-Pesa had nearly 16 million active users and approximately 165 000 authorised agents worldwide.
Local lag
M-Pesa was launched in SA by Vodacom and Nedbank in September 2010. On launch, Vodacom projected it would sign up 10 million users in the first three years, but the service has been held back by regulation and the integration needed to move money from a bank account to an electronic wallet.
While the service has gained a significant foothold elsewhere in Africa - notably in Kenya and Tanzania, where the banking market is less mature and regulations fewer - there are only a few hundred-thousand South Africans signed up to M-Pesa.
In May last year, Vodacom CEO Shameel Joosub conceded the mobile money service had not been successful in SA. At the time, he said M-Pesa would be relaunched "in the next few months" on a new IT platform that would interface directly into banks, and that Vodacom was seeking to expand its distribution channel.
Singh, former head of Standard Bank's Beyond Payments division, was appointed and tasked with the resurrection of Vodacom's financial services platform about month before Joosub made the statement.
In July 2013, Joosub said M-Pesa had again performed well in Tanzania, and announced the launch of the product in Mozambique, the DRC and Lesotho.
Last week, Vodacom's quarterly results for the period ended 31 December revealed its active M-Pesa customers had increased 24.5%, to 5.8 million (23.3% of the active customer base). In Tanzania alone, M-Pesa revenue grew 59%, contributing 19.1% of the group's service revenue.
In its trading statement, Vodacom said: "Following the launch of M-Pesa in all our international markets, our priority is to increase the number of registered users and to drive activity levels by widening distribution and expanding the ecosystem in each market."
Vodacom has not yet indicated when its revamped M-Pesa service will hit SA.
Mobile masses
Marc Carolus, division lead in SA for MasterCard Advisors (the professional services arm of MasterCard), says although the electronic payments market in Africa is still in its initial growth phase, the adoption of technology innovations on the continent and the lack of legacy systems are allowing countries to leapfrog traditional infrastructure. This, he says, is thanks to the ubiquity of mobile phones.
"For example, Africa saw a 36% growth rate in mobile subscriptions between 2011 and 2013, with a 52% penetration rate in 2012."
He says this mobile evolution has almost become synonymous with emerging markets. "Developments in this space are going to facilitate the reduction of cash, with countries such as Kenya already leading the way with M-Pesa."
Despite regulatory challenges, says Carolus, governments, financial institutions, telcos, merchants, and technology companies need to work together to create interoperable services and solutions to transform the payments industry.
"The transition from cash to electronic payments must continue, as this will support the much-needed development of African economies, some of which are growing at more than 20% a year."
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