Mobile wallet will change the lives of the unbanked

2010-09-05 13:00
Mpho sibanyoni
What is M-Pesa and how does it work?
M-Pesa is a mobile money transfer service that allows money to be ­transferred through a cellphone.

To open an M-Pesa account, you’re only required to take your identity document to one of the M-Pesa ­outlets, which include Vodacom shops, large and small retailers, and Nedbank ATMs, for registration.

You can then deposit money and ­decide which person to transfer the cash to.

The money can then be transferred to a cellphone using any network in South Africa.

The recipient of the funds can then decide whether to withdraw the ­money or to transfer it into a different ­account.

This is a Vodacom initiative, but it is not compulsory for the recipient or sender to have a Vodacom account.

M-Pesa was launched as a pilot study by ­Vodafone and the UK Department for ­International Development Financial Deepening Challenge Fund. But the product was never ­implemented in the UK. Why is that so?
Firstly, I don’t think M-Pesa would be that attractive to someone who ­already has access to formal banking.

Secondly, the product needs high cellphone penetration to succeed and retailers where the customers could easily withdraw their cash.

With an estimated 13 million ­unbanked people, South Africa is a large potential market.

What impact would you want this product to have in expanding access to banking services?
We believe the product is going to help extend basic financial services to the 13 million unbanked people in our country.

It would make it easier for people in remote areas to cash out money without having to go to an ATM.

The unbanked will have the ­convenience of transferring money without having to open bank ­accounts. We hope the service will bring those who don’t have access to banking into the formal economy.

What opportunities does M-Pesa offer to small entrepreneurs?
There are two opportunities for small retailers. First, they can register their outlets to offer M-Pesa. Each ­retailer would get commission for every registration, deposit or ­withdrawal made.

The retail stores would also benefit as more customers come to their stores. The customers could also buy other products in the store.

Small entrepreneurs can also use the service to pay their employees.

How is M-Pesa different from the money transfer products offered by one of your competitors and Shoprite?
The main difference is that to ­initiate a transaction, a person needs to be an account holder when transacting with one of our competitors.

With the M-Pesa product, you only need to register as a user of the ­service.

Our competitor’s product allows people to withdraw money only from an ATM.

The Shoprite product only allows the withdrawal of money from ­Shoprite outlets, while our product ­allows money to be withdrawn from various retail stores, including spaza shops.

What has been the success rate of M-Pesa in East Africa, where it has been operating for three years?
A notable success has been in ­Kenya. The product was set up in 2007 and has so far been used by 12 million people to transfer R50 billion.