Mobile Money Africa

WASHINGTON GIKUNJU

Global payments technology company Visa International is courting mobile phone network operators with a view to tying up partnerships that could give the company a foothold in the emerging mobile phone banking services, the group’s general manager for Sub Saharan Africa has said.

Charles Niehaus says the company, which develops plastic card technology for use by banks and retail sellers, is faced with an important choice of “whether it should align its products or compete with the new mobile phone banking and money transfer services.”

Speaking last week when he announced that Kenyan holders of Visa International branded plastic cards had clocked two million, Mr Niehaus said the company sees mobile technology as an opportunity to expand its customer products rather than a threat to its existence.

“Visa has also come up with a mobile money transfer solutions, we are talking to several international mobile phone companies and will reveal some of the new products in the next three to four months,” said Mr Niehaus.

The company has, however, not entered into talks with any of the four local mobile network operators.

Safaricom’s ‘M-pesa’ earned the distinction of being the world’s first mobile phone based money transfer operator when the Kenyan telco rolled out the service in 2007.

Since then the service has attracted over eight million users while Zain, operating in over a dozen African countries, has also launched the ‘Zap’ service as a cross-border money transfer solution.

Both M-pesa and Zap have signalled their inclination to outgrow basic money transfer service by adding on other e-commerce solutions, helped by the cut-throat competition in the market.

While credit and debit card usage in the developed world is widely popular with individuals even holding multiple cards, Africa lags in its adoption of plastic money and providers such as Visa and MasterCard see the continent as a strong growth frontier.

Mr Niehaus says Visa’s 50-year experience and brand name as a payments solutions provider gives it an edge when negotiating for terms to either team up with handset manufacturers or network providers to offer mobile banking services which have become a hit with a majority of Africa’s unbanked.

The continent has over 290 million mobile phone users but only a small fraction has bank accounts, providing a huge potential for any player who cracks the formula for getting them in the formal financial system.

Only about a quarter of Kenya’s estimated 17 million strong bankable population have bank accounts while over 35 per cent of these rely on informal financial service providers with the rest totally excluded from the formal financial system.

Total purchases in Kenya using Visa cards last year topped Sh250 billion ($3.3 billion); out of which a tenth were transactions made using credit cards while 90 per cent were payments made through debit cards.

Twenty two out of Kenya’s 43 commercial banks use the Visa card technology which has been available locally for 19 years, with 80 per cent of Kenya’s plastic card holders having Visa International branded cards.

The company offers a seamless payments system network that is usable in 200 countries worldwide, and is present in over 45 African countries.

Central Bank of Kenya statistics show the country had an estimated 2.5 million ATM, debit, credit and charge card holders by June 2008.

New laws

I&M Bank became the first institution to acquire a licence from Visa to offer a complete online based e-commerce platform following last year’s enactment of laws allowing electronic transactions in the country.

“We are in talks with other banks as well, the interest for e-commerce payment solutions is big,” said the Visa International country manager Victor Ndlovu.