Vodacom is set to reconnect with its mobile money service, M-Pesa, after the offering failed to gain traction in the local market.
The mobile currency which has been popular in other markets, such as Tanzania, where Vodacom first kicked off, currently accounts for 6% of the group’s overall revenue. However, in SA, it only has a few hundred-thousand users and has been held back by legislation and the integration needed to move money from a bank account to an electronic wallet.
CEO Shameel Joosub expects M-Pesa to account for about 15% of Vodacom’s revenue as a group in the next three years, while airtime purchased via the offering is set to move from 20% in Tanzania to between 20% and 35%.
M-Pesa was launched by Nedbank and Vodacom in SA in September 2010. The service enables unbanked customers to transfer money from person-to-person using a cellphone. It was originally created as a pilot funded jointly by Vodafone and the UK Department for International Development Financial Deepening Challenge Fund.
Since then, the service has been successful in the Kenyan, Tanzanian and Afghanistan markets, gaining more than 10 million customers. On launch, the partners estimated there were more than 13 million “economically active” people without a bank account, while Vodacom projected it would sign up 10 million users in the first three years.
Joosub concedes the offering has not been successful, and says it will be relaunched in the next few months on a new IT platform that will interface directly into banks. The company is also seeking to expand the distribution channel to add on more points of sale, he notes.
One of the barriers to uptake is the Financial Intelligence Centre Act (FICA), as many informal traders do not want to go through the process and cannot justify the administration of FICA without sufficient customer demand.
Joosub says FICA has been relaxed so that small amounts of money can be moved without the need for paperwork. M-Pesa was first launched in Kenya, which has a less mature banking market with fewer regulations.
The mobile currency has also flourished in Tanzania, with active M-Pesa customers gaining 57.5% to 4.9 million in the year to March. “With 51.6% of Tanzania’s customer base actively using M-Pesa, the service now contributes 14.1% to Tanzania’s service revenue, up from 8.4% a year ago,” states the results presentation.
Vodacom launched M-Pesa in the Democratic Republic of Congo in the last quarter of the year and made the service available across the rest of its operations this year, says Joosub.