MTN will use mobile financial services provider Fundamo's Mobile Wallet solution, in a deal worth about $9.7 million (R100 million). The offering will be targeted at the cellular network service's 80 million subscribers in 21 African countries.
The deal is an extension of the existing relationship between MTN and Fundamo; expanding MTN MobileMoney from SA into 20 additional countries.
Pilots by MTN of the Fundamo services have been conducted by MTN's operations in Uganda and in the group's West and Central Africa region operations (Cameroon, Ghana, Cote d'Ivoire and Nigeria) since October 2008. Five additional pilots were recently launched in Benin, Congo, Guinea Bissau, Guinea Conakry and Liberia. MTN Uganda announced its commercial launch on 10 March. Projects have also commenced for several of the MTN Middle East operations.
Arthur Goldstuck, CEO of Internet research firm Word Wide Worx, says MTN has to play catch up to Vodafone's M-Pesa money transfer system that has taken the East African nation of Kenya by storm.
“Vodafone launched the M-Pesa there as a trial for person-to-person money transfers because of that state's less sophisticated banking laws and it has proved to be a resounding success,” he says.
Security measures
MTN MobileMoney is a SIM-based version of Fundamo's Mobile Wallet Solution version 3.1, specifically designed to meet the needs of MTN's subscriber base. Using Hardware Security Module technologies that offer ATM-level security, and a PIN system that prevents sensitive information from residing on the handset, users are safeguarded against theft and fraud.
The solution is also compliant with all banking and Financial Intelligence Centre Act regulations, enabling banks to login to the system and manage the banking elements of the service, while MTN focuses on customer acquisition and retention.
According to a Fundamo statement, MTN MobileMoney does not require users to set up a bank account. Instead, its offers a variety of services: from money transfer, mobile payments and balance checking, to mobile purchases, and the ability to buy airtime in real-time. Users have the option to receive a branded MTN MobileMoney debit card that can be used to withdraw cash from ATMs.
Fundamo says MTN MobileMoney is anticipated to be a key differentiator for MTN, supporting customer acquisition and retention, while strongly reinforcing the MTN brand in outlets throughout the country that accept MTN MobileMoney payments. Initial trials of the service in several markets show a satisfactory level of acceptance from both end-users and merchants, it notes.
Must expand services
Goldstuck says the mobile operators have to expand their service offerings due to the falling average revenue per user (ARPU) many are experiencing. This is the measure of revenue generated by individual users and it declines as more people join the networks.
“Revenue from data services has not propped up ARPU and the introduction of money transfer services is a way to do this,” he says.
Goldstuck says MobileMoney has not been a success in SA, largely because it was considered too complex for the target market, and secondly, because mobile banking, the service run by the banks themselves, had been so successful.
Dare Okoudjou, head of MobileMoney international development for MTN Group, says Fundamo's solution was chosen because it could support the concurrent multi-country roll-out and aggressive time to market MTN required for its project.
Aletha Ling, Fundamo executive director, says: “Mobile Wallet capabilities have the capacity to change the face of Africa, unlocking basic financial services, improving lifestyles and stimulating wealth through increased commerce.”
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