Real-world payments come to Mxit

Mxit has partnered with Standard Bank to bring real-world payments to the mobile social network through a new application, Mxit Money.

Mxit CEO Alan Knott-Craig Jnr says the new feature offers a big opportunity to monetise Mxit and to turn it into a payment platform. The Mxit Money app integrates Standard Bank's electronic currency, Instant Money, into the social network. Instant Money was initially developed by Standard Bank, together with retailer Spar, to cater for the need for a person-to-person remittance system for the unbanked.

According to Knott-Craig, the service is aimed at plugging the broader South African population into the digital economy, with the key target market being feature phone users who do not have credit cards.

The new service allows Mxit users to send money to each other for free, and to non-Mxit cellphone users for a fee of R7 per transaction. Users can also deposit and withdraw cash, buy Mxit Moola, airtime and electricity using the service.

Mxit Money users do not require a credit card or bank account to use the service, and can add the app as a contact on Mxit, or download the standalone application on the iPhone (an Android app is in the works). Mxit developed the application in collaboration with the Payments Team at FireID, a technology and innovation company from Stellenbosch.

Once users have the app, they can load money at any of the 600 Spar stores nationwide with PayZone counters. First time users will have to provide a photocopy of their ID. Money can also be loaded via the 8 000 Standard Bank Access Points across the country or at Standard Bank ATMs (from September). Money can be withdrawn in the same way by providing the unique PIN generated by the app for the transaction. Existing Standard Bank customers can also use Internet banking services to access Instant Money.

“Mxit's vast community has always been able to transact on its platform using the Mxit currency, Moola. This partnership allows the community to move beyond buying virtual content and start purchasing real-world services for the first time,” says Mxit.

Knott-Craig says this new venture will open Mxit up to great retail and trade possibilities. “This partnership allows us to offer users the ability to transact in the real world from within their social network. Mxit Money is the portal to a mobile marketplace of 10 million users who, with real money, can purchase content and access applications from our development partners,” says Knott-Craig.

John Campbell, head of Beyond Payments, Standard Bank's innovation unit, says facilitating micro-payments and developing services for the unbanked economy has always been part of Beyond Payments' vision.

“A challenge for us has been finding a way to allow the unbanked to buy basic commodities online, and making small transactions feasible. It's really difficult to maintain such applications across all types of cellphones though - and that is a space that Mxit has cracked.

“By partnering with a social network and integrating into the Mxit Money platform, we have demonstrated that Instant Money can be used in the digital and real world to access funds, affect payments and transfer real money between people.”

The initial rollout of the service will be limited to about 15 000 South African users in the first month. “It will be exciting to see what the Mxit community does with this,” says Knott-Craig, adding that the service will be expanded to the rest of Africa in due course.

“Standard Bank will hopefully be the first of many banks that we will work with. This is about giving people a new kind of economic freedom - giving them the ability to pay without physical cash.

“This is a classic example of innovation in the third-world context,” says Knott-Craig, adding that the service caters directly to local needs in a way that other services can't.

“We're not trying to take on the incumbents - this is a win-win situation. Our business model has always been to provide our users with useful services for free, but with the aim of getting them to also buy content with the ecosystem.

“So we are not trying to make money from our chat and payments services, but we are rather just trying to get money into the system. Facebook has been struggling with just that, and in the long run it will be the direct monetisation of mobile that will differentiate the winners from the losers.”