Earlier this month, Vodacom made the decision to shut down its mobile money service, M-Pesa, citing a failure to reach a targeted 10 million users.
According to a report by the BBC, the M-Pesa service only managed to achieve 76 000 active users in South Africa which lends itself to the thought that mobile money has no use case in the South African economy.
This thought is further compounded by the fact that, according to Vodacom Chief Executive Officer (CEO), Shameel Joosub, South Africa’s financial sector is “highly inclusive”, denying very few people access to a bank account.
Why then, is FNB’s own mobile wallet, eWallet, flourishing?
At the last count FNB reported that R33 billion had been sent to users since the inception of the eWallet service. Every month, R1.2 billion is sent to users in South Africa with five more countries in Africa adding even more to this figure.
What then, is the difference between M-Pesa and eWallet if they are, at the core, a similar mobile money service.
Firstly, according to FNB’s new head of innovation, Yolande Steyn, eWallet in South Africa serves as a payment mechanism, but in other countries the service is offered, the use case differs.
“eWallet is a simple solution in its own right and the users choose the use case. In South Africa its not a product that is reserved for the poor, its used by everybody. In Botswana we see it predominately being used by students, the service has somewhat localised itself” Steyn explained at a press briefing in Johannesburg.
The needs of the many and the needs of the few
Steyn goes on to explain that it isn’t just users that determine the success of a mobile money solution but the economy as a whole. As we alluded to earlier, South Africa’s financial services sector, particular in terms of banking, is extremely inclusive.
There is quite literally a banking solution for everybody whether you earn R1000 a day or R1000 an hour. Because of this inclusive nature the need for a mobile money solution is small.
With that said, there is still a need for a mobile money solution among some South Africans, as FNB discovered when a customer pointed out the need to be able to send money quickly and efficiently to people.
But perhaps the biggest driver of the success of the eWallet service, as explained by FNB CEO, Jacques Celliers is the fact that eWallet use is fed by those who send money are sending it from an account which a salary is deposited into.
“For me, I use eWallet to pay people who do odd jobs for me, I use it to pay the kids their pocket money. The success of a wallet service lies in the sending side of the transaction,” Celliers explains.
Logically this makes sense. Sending money from the account your salary is deposited into is a convenience.
Attracting a client to use a service which requires they first top up your account and then wait for the money to clear before being able send money to the intended recipient is, as Steyn describes it, “the hardest thing to do”.
But FNB is not resting on its laurels here and leaving eWallet as a way to simply pay the kids their pocket money.
Steyn explains that additional functionality is constantly being tested and in the future the financial services provider hopes to turn the service into a fully fledged mobile banking solution where users can do more than purchase pre-paid electricity, airtime and withdraw money.
That doesn’t mean that eWallet is untouchable though, especially as services such as Apple Pay and Google Wallet gain proliferation around the world.
The eWallet service then is best described as the unsung hero of FNB’s digital banking channels, giving people a simple, efficient way to pay people and for those people to receive and use that money in a simple way.