Big four bank First National Bank's (FNB) launch of PayPal in SA has spurred other banks into action, as they quickly announce new products that will allow millions of South Africans access to mobile baking.
It is estimated that only about 11 million of SA's 49 million people have access to a formal banking environment and have a bank account. However, there are an estimated 30 million prepaid cellphone accounts - exactly the market the banks are hoping to capture.
Recently, several new applications have been launched to join the likes of MTN MobileMoney, Mowaly and Pocit.
Nedbank fired the latest salvo in the battle, announcing this week it has teamed up with Vodacom to offer M-Pesa, a mobile money transfer solution, in SA. Nedbank's announcement comes on the heels of Standard Bank's deal with Spar that will allow people to draw cash at a till after the money is transferred between users via SMS.
Steven Ambrose, MD of World Wide Worx Strategy, says: “Mobile money, however it is defined, is the next frontier for banking.”
He expects the banking sector to change dramatically over the next few years, and increasingly move onto cellphones and other mobile devices. “The question is: How do I send money to my mother who lives in the back of beyond in KwaZulu-Natal?”
Ambrose says although these plans to capture the market would have been in the pipeline for some time, FNB's PayPal launch spurred Nedbank and Standard Bank into action.
Competition
M-Pesa has already been popular in other African countries. It enables unbanked customers to transfer money from person-to-person using a cellphone. It was originally created as a pilot funded jointly by Vodafone and the UK Department for International Development Financial Deepening Challenge Fund.
Since then, the service has been successful in the Kenyan, Tanzanian and Afghanistan markets, gaining more than 10 million customers. Vodafone first announced its intentions to launch it in SA at the GSMA Mobile World Conference, in Barcelona, earlier this year.
Vodacom SA MD Shameel Joosub says: “Both Nedbank and Vodacom are confident that M-Pesa is going to change the lives of 'unbanked' South Africans, and we are looking forward to the imminent launch of the product.”
However, apart from confirming that the tool meets with the South African Reserve Bank's approval, the companies have not provided much other information, and will only do so at a later stage.
This leaves several questions hanging, such as whether M-Pesa can be used to store money like a traditional bank account, and whether people would have to take money out at a Nedbank ATM or branch. The costs involved in transacting have also not been explained.
Me too
Nedbank's announcement comes on the back of news that Standard Bank has introduced a new person-to-person money system. The big four bank has teamed up with Spar to allow South Africans who own a cellphone to transfer money.
Instant Money will use Spar's 850 stores to reach communities in some of the most remote parts of the country. The money is sent and received at Spar outlets, using a cellphone to transfer information. Instant Money will initially be available from Spar stores in the Eastern Cape.
Standard Bank CE Sim Tshabalala says the new service means people no longer have to take the risk of giving an envelope full of cash to a middleman - like a friend or a taxi driver - and telling them where to deliver it. “It's a way for users who don't have a bank account to get access to financial services,” he says.
Tshabalala explains that traditional financial services are limited to urban areas because of the cost involved in rolling out banks in less well-to-do areas. As a result, people living in rural areas tend to operate on a cash basis.
Instant Money has been developed to allow access on basic handsets, and across networks.
Hurry up
FNB, which launched PayPal in SA earlier this month, has hinted that it may also look at a mobile application to transfer money.
CEO Michael Jordaan said at the press conference that the company had several ideas in the pipeline, but development would depend on consumer demand. He added that the iPhone was enabled with an application that allowed the money transfer system to be used.
PayPal is limited to FNB's 6.6 million account holders, but is viewed as a way of growing its market share.
Meanwhile, ITWeb has discovered that Fourpoint International registered both Mpesa.co.za and M-pesa.co.za domain names in 2008. Neither sites have any content on them.
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