Mobile voucherless top-up: An innovative job creation solution for Africa

While tourism is widely hailed as one of the ultimate solutions to widespread job creation in Africa, there is in fact enormous potential in the burgeoning GSM cellular industry.

So says Andrew Turpin, Director - PayPoint Solutions at JSE-listed trusted transactions company, Prism Holdings, who estimates that widespread adoption of an innovative Mobile Voucherless Top-Up (M-VTU) solution by network operators could create tens of thousands of jobs - for almost no capital outlay.

"We estimate that for every 500 000 prepaid cellular subscribers, 9 000 jobs could be created - and even the smallest African network operator currently has more. Significantly, these individuals would not require much training nor would any investment have to be made in physical infrastructure," he adds.

Turpin explains that M-VTU is a technology that enables the distribution of prepaid cellular airtime by any entrepreneur with a standard GSM handset and access to a cellular network.

"The main driver for M-VTU is that prepaid users want to be able to recharge their airtime simply, securely and conveniently, and yet in Africa logistical problems hamper the process in many different ways," he says.

"For example, the physical distribution of traditional recharge vouchers to remote areas is difficult, these vouchers are also vulnerable to fraud and shrinkage.

"While IVR (interactive voice response) systems have eliminated some of these physical voucher headaches, these are generally credit card-based and require some form of pre-registration. These systems therefore exclude many individuals who do not have access to credit card accounts or who are unbanked," he adds.

"M-VTU enables a cellular network`s prepaid cellular subscribers to recharge their handsets almost anywhere, anytime and with absolute security."

A further problem experienced with some voucher systems is that merchants still have to purchase `physical vouchers` of predetermined values, which are then `stored` in a virtual warehouse. These warehouses could be compromised or succumb to system failure.

Turpin believes the answer then is a Mobile Voucherless Top-Up rather than a conventional top-up solution. In this system, a vendor (an entrepreneur with a cellular handset) purchases bulk airtime from the network operator. Airtime value, as opposed to a virtual voucher, is then `transferred` directly from the vendors` cellular handset to that of the customer. When the vendor runs out of airtime value, it is a simple task to purchase more to resell to customers.

Turpin predicts that this solution will be particularly attractive to the African GSM market as a large percentage of the population has low disposable income and would typically favour being able to purchase prepaid airtime in lower denominations than is currently being offered.

Traditional voucher top-up systems currently only offer airtime top-up vouchers of predetermined values starting at around R25 per voucher in SA.

Studies have shown that a large number of customers at the entry level of the cellular market drop out of service because of the fact that traditional prepaid top-up vouchers are simply "too" expensive. Particularly when limited income tends to be required for the purchase of essential items such as food and other basic necessities. This solution will better fit the pocket of customers short of cash or faced with the challenge of managing a particular cashflow situation.

The M-VTU system provides an excellent platform to address this issue directly at the coalface since airtime can be purchased at rates as low as just a couple of rand. Conversely, the benefit to the mobile operator is a superior subscriber retention mechanism and an opportunity to generate "inbound" churn.

"This recharge system enables network operators to contribute towards job creation in the region as it works through the establishment of a network of virtual vendors who can further distribute and vend airtime through sub-distributors," Turpin continues.

According to Turpin, the key to enabling the Prism M-VTU solution is the provision of a virtual merchant SIM card. The SIM contains a secure application that allows for the virtual distribution and vending of airtime (extendable to other prepaid products) from the mobile handset in a totally secure, scaleable and manageable manner. The vendor only dispenses the airtime value when the customer requests it, and immediately transfers that value (less his commission) to the customer`s handset.

"In effect, with the vending SIM, the virtual merchant`s handset becomes a sales device driven via a simple and easy to use M-VTU menu. It`s simple, quick, affordable and convenient. A network operator that drives the system`s adoption could be responsible for the creation of thousands of employment opportunities," he concludes.