Vodacom has announced that it is relaunching its M-PESA mobile money payments system today, with a new look design for South Africans.
M-PESA originally launched in Kenya in 2007, as a simple mechanism for transferring cash amounts between phone owners via SMS. Customers bought a PIN number from participating agents which they could SMS to anyone else in the country, who could then redeem that voucher for the face amount – less a handling fee – at any M-PESA agent. It found a huge audience as a mechanism for transferring cash from city workers to their rural families, and is now used by 70% of the Kenyan population.
Today’s M-PESA is vastly more sophisticated but still simple to use. 70% of Safaricom (Vodacom’s sister company) mobile customers in Kenya use it, and it is used for paying social grants and government workers as well as at retail points of sale. In Tanzania, it was recently reckoned that more than 50% of GDP is now accounted for in mobile money transactions, of which M-PESA commands the lions’ share. According to Vodacom, that’s 51 million transactions worth more than a billion US dollars a month.
In South Africa, however, the story has so far been far less of a success for Vodacom. Initially launched in 2010 the system was suspended earlier in the year due to lack of interest among customers. Today’s new improved M-PESA has been redesigned from scratch, says Vodacom’s Herman Singh, and is backed by a Bidvest, rather than Vodacom’s previous partner Nedbank.
“There was a lot of learning from M-PESA mark one,” Singh said at the launch of the new service, “And the basic one was that South Africa is not Kenya. We cut and paste the system and assumed customers would react n the same way.”
Within Africa, Singh says, South Africa has a relatively well-developed banking system. Many people remain “unbanked”, but there’s a high penetration rate of ATMs and electronic points of sale (EPOS) compared to its neighbours.
“We hadn’t demonstrated why Vodacom mobile customers should use a Vodacom banking system.”
The new and improved M-PESA is based around a voucher system for topping up a mobile wallet, and funds can be withdrawn using cardless transactions at ATMs or via a connected M-PESA VISA card, which can be used at all EPOS points.
Customers can buy the VISA card off the shelf, connect it to their M-PESA wallet and receive immediate FICA approval to start using it.
“The registration process is significantly quicker than we had the first time,” says Singh.
Ultimately, says Vodacom Group CEO, Shameel Joosub, “The vision for M-PESA South Africa is as ambitious as elsewhere on the continent.
“What we want to do in South Africa is build the same ecosystems as Tanzania and Kenya. We are recruiting not just customers but businesses as well.”
At launch, Vodacom has some 5 000 informal traders signed up to sell M-PESA vouchers and 3 000 formal retailers including Vodacom stores and Foschini subsidiaries. By the end of the year, the firm hopes to have 30 000 agents signed up at a rate of 100 new agents a day. Joosub says that a key part of encouraging M-PESA use will be through airtime or data service rewards.
“We have the ability to incentivise behaviour, if you do certain things like pay your utility bills we can give you [rewards] back,” says Joosub, “When you have a big customer base you can use that.”
The challenge for Vodacom, however, remains that competition for mobile money services in South Africa is high. MTN, FNB, Net 1 and Standard Bank have all launched or relaunched their own mobile money services in the last few months.
According to Joosub, Vodacom is aiming for “the same success as Tanzania” within two years.
One area where M-PESA could break new ground is in the area of cross-border transactions, assisting migrant workers to send money home. Right now, that’s not possible, but Bidvest’s Japie van Niekerk says that discussions are being held with central banks to allow small transactions to take place without calling into action money laundering laws and foreign exchange controls.
Right now, however, the VISA card is only usable within South African borders and no M-PESA system can transfer money to another national account.