Mobile operator MTN has taken its Mobile Money e-wallet service into the physical realm, with the launch of a prepaid Visa card available through Pick’n’Pay and Boxer stores.
The card comes with a one-off R29 charge and can be used to draw funds from a mobile wallet at ATMs or till points, with unlimited free swipes. According to MTN, some R2.5bn has already been processed in Mobile Money transactions using USSD and apps, and the service received full regulatory approval to offer banking services in March.
Phone-linked credit cards and prepaid credit cards are widely tipped to be the equivalent of Kenya’s M-PESA service for bringing financial services to the 67% of South Africans who don’t currently have bank accounts. Firms such as Net1 are also investing heavily in the area, offering one-time-use credit cards and cashless wage payments for industry, while a wider plan to introduce a nationwide card for public transport based on the Visa-Mastercard EMV system will help raise demand for plastic.
Many see prepaid credit cards and mobile-linked cards such as MTN’s new Mobile Money Visa as a way of improving security for those in the informal economy, as well as giving those without bank accounts a mechanism for savings.
“South Africa is still very much based on cash and there’s a lot of informal transactions still happening,” says Frederic Guillou, Commercial Director for Southern & Eastern Africa at card security vendor Gemalto, “Cash a huge cost, even for the merchants and the people in those informal settlements. Cash is a problem.”
This kind of easily accessible card isn’t just for countries like South Africa either: in the US, it’s predicted that the market for pre-paid credit cards will reach $200bn (R2 trillion) this year, or a full 5% of all retail spending.