At the unveiling of mobile banking service M-Pesa, Vodacom committed to a target of 10 million subscribers within three years. One month in and the operator says it is only just nearing 10 000 subscribers.
Vodacom says it is confident the take-up of M-Pesa is accelerating and has kicked off a nationwide road show, involving 343 destinations, including the outlying rural areas.
However, analysts point out that at the current subscriber growth rate, it will take Vodacom approximately 10 years to achieve its target.
World Wide Worx MD Arthur Goldstuck argues that it is simply a pipedream if Vodacom is trying to emulate the success of the service in Kenya.
He argues that the projected target may be good for marketing but is unrealistic when considering the unique circumstances in which the local service has to operate compared to those in Kenya.
Complex and costly
A loophole in the regulatory environment in Kenya when M-Pesa was introduced meant mobile operator Safaricom did not require a formal banking partner to go to market with M-Pesa, explains Goldstuck.
“The service is ideally suited to citizens at the lowest wrung of the economic ladder for which every rand is significant,” he states.
Goldstuck explains that by extension of the partnership between Nedbank and Vodacom, a large component of every transaction will be cost which will in turn drive up the price of the service.
Frost & Sullivan industry analyst Spiwe Chireka is more confident of M-Pesa's success but notes that SA's banking environment, with more than half the working force banked, is a lot more mature than that found in Kenya at the time of launch.
Chireka also points to the fact that Safaricom unveiled the service in an unrivalled market and enjoyed no direct competition for the first 18 months of the service.
Distribution is king
Chireka believes that if M-Pesa is to enjoy any real success in the local market, Vodacom must focus on building a strong and extensive distribution channel. “He who holds the largest distribution channel is king. Distribution is everything when it comes to mobile payment systems.”
Vodacom will need to succeed where the banks have failed and that involves pervasive access and availability of the collection and payment points for money transfer services, she prescribes.
M-Pesa's current distribution reach extends to PEP Stores, the Pick 'n Pay Group, including Boxer stores, and Massmart, which includes Game and Masscash. Vodacom is also in talks with Edcon's Edgars, CNA, and Jet outlets, as well as GloCell and Altech Autopage, to offer the service.
Blue Label and Smart Call are also recruiting small and medium-sized outlets across the country, including many rural areas.
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