Mobile Money Africa

Leading electronic payment service provider, VISA, intends to displace the use of cash with the use of ‘plastic money’ in sub-saharan Africa.

Speaking during a recent media tour in Johannesburg, VISA Sub-Sahara General Manager Charles Niehaus said the use of Visa cards for payment promotes circulation of money in economies.

Botswana, alongside Kenya, Mauritius, Mozambique and Namibia, was listed as VISA’s fastest growing markets outside South Africa. Niehaus said the use of VISA cards as a form of payment drives economies as electronic money circulates faster than paper money.

“There are benefits in a cashless economy,” he said. “The use of VISA cards boosts gross domestic product growth. It brings people into the banking system.” Plastic money also improves financial transparency and eliminates the grey economy.

Plastic money has also stimulated consumption, Niehaus noted, saying the ultimate aim of the use of VISA cards is to bank the un-banked. “We want to bank the un-banked,” he said. “There is a large un-banked population out there.”

Niehaus said most governments now use the system to pay their bills, which is more efficient and time-saving, hence there has been an increase in government efficiency since the advent of VISA cards.

He said VISA’s involvement in the just-ended FIFA Confederations Cup and the 2010 World Cup sponsorships provided the company with the required reach. “FIFA has a reach that our brand needs,” he said. “Our association will stretch our brand into more spaces.” He said VISA, which operates in 24 sub-Saharan countries, has proven its integrity, hence banks allow the company into their systems. VISA has emerged as the largest payment network company in the world to the point where their expansion challenge is infrastructure, where some countries still lag behind in technology, Niehaus said.

VISA’s Head of Innovative Payments in Sub-Sahara, Nick Essame, said VISA has introduced VISA Paywave, which is a card that uses an electronic chip. The project was piloted in Mauritius. So far, 25 million VISA Paywave cards have been issued. The Paywave card is an improvement on the magnetic strip to chip as VISA moves to clamp down on fraud.

“We are seeing a lot of convergence of payment cards,” Essame said. “We are trying to bring the right technology to the right market.”

Essame said VISA is in the process of introducing VISA Mobile because the use of the cellphone continues to grow globally. “Mobile may be the world’s first ubiquitous technology with over 3.3 billion devices in use,” Essame said. VISA operates the world’s largest retail electronic payment network with over 1.7 billion cards with a volume of US$4.3 trillion.

Mqondisi Dube

Lagos — Mobile banking in Nigeria is expected to contribute at least some $8 billion to Nigeria’s treasury by year 2012, Rep Ado Dogo has said.

Dogo, the Chairman of the House of Representatives committee on labour, employment and productivity stated this in Lagos at the Chartered Institute of Personnel Management (CIPM) human resources forum for the telecommunication sector.

He said “mobile money transfer market is expected to create revenue opportunity of almost $8 billion by 2012 from just about $10 million in 2006.”

Dogo made the assertion on the heels of raising revenues from the telecoms revolution in Nigeria. According to him, the telecommunications contributed N22.91 billion to Nigeria’s DGP in 2007.

He said the sector is also a big contributor to employment creation in Nigeria and the development of micro, small and medium size businesses across Nigeria.

These multiplier effects, he said translates to more revenue for the sector and increased government revenue through taxes.

He however tasked the operators to justify the huge profits by reducing the high cost tariff presently being charged. Also speaking, the President CIPM Dr. Oladimeji Alo explained that the Institute decided to hold HR forum for the telecoms sector because of the phenomenal growth.

Chris Agabi

Want to carry your mobile phone on your next trip to Tanzania?

You must register with service providers, for the country has made it mandatory for all SIM card owners to be enrolled in a national data centre.

Tanzania, which has 17 million subscribers, hopes the new requirement — a process which it says will take six months to complete –will give the war on crime fresh impetus.

Foreign mobile phone owners visiting Tanzania will have to register them with service providers as Tanzania starts to enforce the newly enacted law.

The government launched the SIM card registration process last week.

In Kenya, leading operator Safaricom says it could take three years to register all SIM cards were such a law to be adopted.

There is an attempt by the regulator, Communications Commission of Kenya (CCK), to introduce such regulation.

However, operators say the move would work against universal communication access principals and add to the cost of SIM cards as vendors would have to invest on data capturing equipment.

Businessmen and organisations with a regional presence that require their staff to be on the move will be the most affected by the Tanzanian move.

“Any attempt to register in-bound roamers will have significant impact on forex inflows owing to muted use of roaming facility occasioned by newly introduced bureaucracies that affect tourism and travel in to Kenya by foreigners.

“At great risk are regional services such as Safaricom’s Kama Kawaida,” said Safaricom chief executive, Mr Michael Joseph. There is also Zain’s One Network that allows subscribers to call at the same rate across borders.

Mobile phone use has witnessed phenomenal growth in East Africa with con artistes cashing in on the trend to extort money from some subscribers.

Often, they cheat the subscribers that they have won presents and should send money through the mobile money transfer system to help them (criminals) to process the presents or money.

There have also been cases where people have been abducted, with their tormentors using mobile phones to demand ransoms from relatives or friends.

Just like Tanzania, CCK and the government have given security as the reason for the plan to introduce such a law.

In Brazil, SIM cards are registered using national identity cards for citizens and passports for foreigners. The same documents are used in India.

In Senegal, SIM cards are registered using different means of identification including passports, driving licences, bank cards, etc. In the Philippines a mechanism is in place to register SIM cards without using the national identity card.

However, there is a law in place for regulating the sale and/or disposal of pre-paid SIM cards.

In South Africa, a legal framework for phone equipment and SIM card registration exists. Safaricom says it is not opposed to such an initiative.

However, the firm prefers more consultation on the issue.

“We favour a measured approach to legislation that will balance the public interest as far as the preservation of security is concerned, the protection of privacy, and the maintenance of sound commercial incentives to foster the growth of mobile telephony,” said Mr Joseph.

Safaricom suggests that specific legislation should be enacted on the issue as opposed to piecemeal amendment of relevant law.

Okuttah Mark

LONDON: Mobile operators seeking the “killer application” that customers can’t live without should look again at emerging markets, where mobile
money is proving a valuable tool for connecting the unbanked.

Carriers in Africa, Asia and Latin America are finding that offering customers the chance to use their phones to transfer money to family and friends, pay bills or make purchases brings the kind of loyalty that Western counterparts can only dream of.

Although the sums of money involved are mostly tiny, many of these customers have no bank account, meaning their handset is their first and only connection to the financial system, and changing telecoms provider is extremely disruptive.

“Once you get to a critical mass, if you’ve got customers, you’ve got customers for life,” Brian Richardson, chief executive of South African mobile banking company Wizzit told an industry conference in Barcelona last week. Western carriers have largely pulled back from adventurous acquisitions in emerging markets, which became unpopular with shareholders and were then stymied by the global credit crunch.

Instead, seeing the success of Apple’s iPhone and fearing the prospect of becoming mere “dumb pipes” for valuable media content, they have become preoccupied with trying to boost profits by driving up data usage in developed markets.

The industry’s hottest M&A news is the $23-billion attempt by India’s Bharti Airtel to merge with South Africa’s MTN, while Kuwait’s Zain blazes an acquisition trail through 24 Middle Eastern and African markets.
Zain has created a multinational network by scrapping roaming charges across its markets, and is rolling out its mobile-money service Zap across the network, which it reckons will help it double customer numbers to 110 million by 2011.

In Western economies, using mobile phones for banking seems an obvious next step, but in fact the obstacles are greater as both banks and telcos both want to own the consumer, while the need for new ways of delivering services is not urgent.

“The pain level to move money in developed countries is low. The pain level to move money in emerging countries is high,” Eric Duprat, general manager of PayPal’s mobile business, told the conference organised by industry group the GSM Association. With internet banking, ATM machines and ample bank branches available in most developed markets, the focus of mobile banking in the West is on near-field communications technology that makes contactless payments possible with the swipe of a phone.

To make this possible, banks and telcos would have to collaborate in an unprecedented way, with each wary of giving up any control over their prized customer base. “I don’t who’s greedier, the banks or the network operators,” Richardson said.

Banks such as HSBC’s First Direct are adapting existing internet-banking platforms to make them more suitable for mobile use, for example on Apple’s iPhone — but would ideally do much more.

“We certainly believe that phones could eventually replace credit cards,” Jenny Southwell, First Direct’s head of digital marketing, told Reuters.

“The main thing that’s holding us back is the manufacturers aren’t putting phones in the mass market. It’s sort of chicken and egg. You need the retailers to accept it, as a form of payment before the manufacturers will put it on the phones.”

In the end, consumer demand will probably bring about mobile banking via contactless payment in the West some time in the next few years, but neither banks nor mobile operators may make money out of it, Andrew Bud, executive chairman of mobile transactions firm mBlox, believes.

“It gives you a disadvantage, if you don’t participate, but there’s no upside if you do,” he told Reuters.
In the developing world, the number of mobile-money deployments is expected to double to 120 by the end of 2009.

Some of the biggest are M-PESA in Kenya, run by part Vodafone-owned Safaricom, Zain’s Zap, MTN’s recently launched MobileMoney, which it will deploy in over 20 countries, and PLDT’s Smart Money in the Philippines.

Momentum, as the unbanked seize the chance to get financially connected, seems unstoppable. For many, it means an alternative to long queues or dangerous journeys to send and receive remittances from work abroad.

The profitability of these deployments is still unproven — but M-PESA brought in 4.1% of Safaricom’s total revenues last year, and increased the number of signed-up users to 6.2 million by the end of March, up from 2.1 million a year earlier.

Reuters

Mobile Money could reach a one-third penetration rate within 5-years, says a new report from Ovum. The report finds the market is still in its infancy, yet it has the potential to become a mass-market service. However, much will hinge on how well the industry addresses various market barriers, and its ability to nurture user demand with clear, simple and attractive propositions.

The mobile money market has accelerated in the last two years in emerging markets, mostly in more mature markets.

“The success of Vodafone’s Kenya subsidiary Safaricom with its mobile money service M-Pesa has underlined the potential for mobile money services,” says Angel Dobardziev, Emerging Markets practice leader and co-author of the report. Yet, despite more than 100 launches of mobile money services by both service providers and banks globally the marketremains in a fragile state with few well-established services.

Whilst there is a range of alternative scenarios, Ovum predicts that the most likely scenario will be a market where service penetration reaches between 30% and 40% of the emerging market’s mobile users in 2014. Where the industry resolves the market barriers more quickly than envisaged, an optimistic scenario is possible where strong user demand propels mobile money services to penetrate between 60% and 70% of the mobile users in the emerging market by 2014.

One of the key factors influencing market uptake of mobile money services is the relatively low penetration of access to financial services compared to higher (and fast-growing) penetration of mobile services.

Service providers along with banks will need to target unbanked and connected customers as they are the key demand driver for the market today, says the report. “Recruitment, training, incentivising and support of networks of mobile money agents will be key to service providers’ mobile money strategies, particularly when it comes to targeting unbanked customers”, says Dobardziev. “Without access to an extensive distribution network for the users to deposit and withdraw cash as they make use of the service, users will be prevented from making the most of the service.”

In order to ensure early user disappointments do not extinguish the market, services providers must get the basics of the service right. “This means not losing sight of the fact that telecoms and banking have very different volume, size, margin and error tolerances on their core transactions. As the two worlds draw closer with mobile banking, this will mean a different mindset and approach to service provision, reliability and security,” Dobardziev concludes.

Kampala — Over 150 local business operators countrywide are set to benefit from a new arrangement through which they would be enrolled as Mobile Money Me agents.

African Christians in Development (ACID) in partnership with the United Bank of Africa, Uganda (UBA) have started an initiative to recruit mobile money agents who would help the two parties speed up their activities among the underserved communities.

Under the initiative, local people holding accounts with UBA as well as ACID members would easily transfer money to all players, deposit cash on own and other accounts, withdraw cash, pay utility bills and purchase airtime among other uses.

ACID Chief Director Pastor Aaron Siribaleka yesterday said that members who intend to become agents would be required to register at ACID countrywide offices or at Mengo near Kampala to prepare for the training slated for August 3 to 7, 2009. He said the training would be held at ACID head offices in Katovu, Masaka.

Ephraim Kasozi

Safaricom shareholders will have to walk on the uncharted waters of technology company valuation when they meet for the first annual general meeting of the mobile operator next month.

During the meeting scheduled for August 19, Safaricom will ask shareholders to approve its acquisition late last year of a Wimax provider, OneCom, that analysts say the mobile phone firm may have overpriced.

The battle over OneCom’s valuation is underpinned by the fact at the time of its acquisition by Safaricom, it did not have a single client, making some analysts argue that the pricing was largely based on goodwill rather than tangible assets.

That position is, however, challenged by the complex realities of the telecoms market where intangible assets such as frequencies attract high premiums in a market like Kenya’s where they are hard to get.

Critics of the OneCom deal argue that it was out of tune with recent ICT mergers and acquisitions that should have informed its valuation and pricing.

Safaricom acquired OneCom at a price of Sh185 million in a deal that was seen as signalling the next frontier in the battle for control of Kenya’s telecommunications market.

The acquisition came shortly after the telecoms market regulator, the Communications Commission of Kenya (CCK), changed the licensing regime to issue unified licences that allowed operators to offer multiple services that are not tied to the technology they are using.

That licence was critical to the execution of Safaricom’s new business strategy that required the firm to broaden its services from the traditional voice market to the data market.

Safaricom’s inroads into the data market had begun with the acquisition of the 3G technology that allowed its customers to access Internet using their mobile handsets.

But the mobile phone company also needed a reliable platform to deliver wireless Internet to homes and offices. That was only possible with its acquisition of Wimax —a wireless communication frequency that delivers Internet to specific locations.

Telecoms industry experts say Safaricom would have paid only Sh15 million to acquire the resource directly from CCK. But the telecoms sector regulator had run out of frequencies, leaving acquisition of an existing frequency holder as the only option for new entrants into the wireless Internet business.

Though the real value of OneCom cannot be determined only a year into the acquisition, some analysts still believe Safaricom overpaid for frequency.

Emmanuel Were

mpesa

Attitudes towards mobile financial services are fast changing, with more people embracing the technology as a reliable means to access their finances, a new global study by Harris Interactive shows.

The study found that mobile phone users are increasingly becoming comfortable making banking and purchase transactions while on-the-go – a virtual taboo until recently.

At least 16 per cent of mobile phone subscribers already use mobile banking services, with 60 per cent of these people using the services at least once a week, says Harris Interactive.

Many others presently not banking and buying on-the-go expressed interest in mobile banking, with 35 per cent open to checking bank account balances and transferring funds via their mobile devices.

A third of those surveyed (33 per cent) also said they would like to receive text message alerts from their financial institutions.

The survey also finds that on-the-go mobile purchases are on the rise. About 25 per cent of mobile phone users with mobile access to the Internet now use their devices to buy goods and services online via a credit card.

One in five respondents (20 per cent) said they would like to someday use their phones like a “mobile wallet”, where charges would be billed directly to their mobile accounts.

In addition, ten percent of the survey participants said they would consider wire transfers and stock trading via their mobile phones.

“Today’s mobile devices are the springboard for a whole raft of services, with huge pent-up demand for mobile commerce capabilities,” said Joseph Porus, vice president, Harris Interactive.

Security concerns
“If security concerns can be quelled, the sky’s the limit with consumer acceptance of mobile banking and purchase transactions. It’s a very intriguing prospect for the near future, considering how people have already embraced a variety of mobile technologies beyond simple phone communications.”

Among those surveyed, the biggest barrier affecting consumer acceptance of mobile banking and commerce is security concerns over personal data.

Two-thirds (66 per cent) of those interviewed express apprehension about using their mobile phone to transmit sensitive financial information.

Masary Egypt started its mobile commerce services operation the first week of June 2009 and just after one month of operation it managed to hire more than 100 merchant outlets in rural areas to distribute Masary’s first service; Electronic Topup. Masary is focusing on non traditional merchant outlets to first distribute its planned digital and commerce services across Egypt and then deploy the services in the Middle East in partnership with key strategic local players in each country.

Cairo, Egypt July 27,2009.Masary Egypt started its mobile commerce services operation the first week of June 2009 and just after one month of operation it managed to hire more than 100 merchant outlets in rural areas to distribute Masary’s first service; Electronic Topup. Masary is focusing on non traditional merchant outlets to first distribute its planned digital and commerce services across Egypt and then deploy the services in the Middle East in partnership with key strategic local players in each country.

Merchant types are groceries, stationary shops, kiosks, gift shops, internet cafés and street sellers. The revenues potential Masary offers to its partners along with the value proposition merchants already experienced through Masary services during the market trial phase were the main contributor factors in attracting more merchants to Masary, they joined Masary’s network because they tested the services and found out that they can gain money partnering with them.

“Dealing with Masary forced me to educate my shop visitors to use Electronic Topup rather than buying a physical scratch card due to its unavailability and the simple user experience provided by Masary”, said Mahmoud Aly; a grocery shop owner.

Masary is positioning themselves as a third party service provider within the value chain and the payment echo system, serving telecommunication companies that have service coverage across the whole country with a significantly large distribution network. Telecommunication companies believe that there is a great potential in rural areas; the question of how to serve this market in a very cost efficient manner is the main focus of Masary’s business development team members.

Currently Masary is piloting some Micro Finance mobilization services and testing the concept and the feasibility for each player in the system. Financial Institutions find it very expensive to serve rural areas; commercially it is not feasible, and MFIs always look for new innovative ways to increase their market boundaries and customer base.

High operational cost serving some areas is due to difficulty of transportation and lack of efficient tools to collect small amounts of cash installments. Some of the MFI customers delay the loan payment and prefer to pay penalty simply because they cannot travel or rather prefer to take care of their micro business in the day of payment; this leads to higher interest rates on the loans and accordingly decreases the potential market.

Some people think that is no business can be done serving the bottom of the pyramid; which is not true on most cases. The key is to understand the need of the rural area segment and live it, to be able to serve them and provide them with a value for the money they will think twice before they spend.

Masary’s vision has a social responsibility aspect embedded in it, “we cannot do business serving this segment without really believing in having a social role to play”, said Omar El Sanhoury, Masary’s CEO.

Masary depends on partnering with small entrepreneurs in rural areas. Entrepreneurs build strong business relationship to enable them to have access to simple technological tools and more business opportunities using Masary’s network. Masary’s business model is simple; every participant in the echo system has to win, this is the challenge that Masary is fixing when dealing and negotiating their services with each party in the chain.

Masary founders and board of directors have a very solid experience and a history of building successful mass consumer and business propositions in the Telecommunication, IT and Financial sectors. Masary is a shareholding company, established in Egypt in 2008 and supported by a group of sister companies one of which is a well known System Integrator in Egypt; “Advanced Computer Technology (ACT)”. Masary invested in the best technical setup in the field of electronic and mobile payment globally, Sybase 365 MCommerce & MPayment solutions, which was ranked number one by industry analysts ABI Research.

Masary is signing strategic partnership agreements with local key players in the value chain like Core Banking Application Provider, Mobile Banking Service Provider, an MFI Loan Tracking application provider, a Multinational System Integrator specialized in serving Banking and Telecommunications industries.

For more details about Masary, please visit http://www.e-masary.com

Western Union

New Agent signings and contract renewals across Africa in the first half of 2009 takes Agent network beyond 15 000 locations

MOROCCO, July 28, 2009 – The Western Union Company (NYSE: WU), a leading provider of global money transfer services, today announced that its Agent network on the African continent now exceeds 15 000 locations across 49 countries, constituting the largest single financial services network in Africa.

In the first half of 2009, Western Union signed contracts with several new institutions, extended a number of its Pan-African group level agreements into further countries, as well as renewed existing Agent relationships. This resulted in the addition of more than 1,000 Agent locations to its network comprising of over 200 Agents, the majority of which are banks and postal institutions.

“We are focused on delivering on our promise to African consumers to bring the Western Union® Money TransferSM service to where they work, shop and live”, commented Nathalie Ferrant, Western Union’s Business Development Director, Africa.

Western Union first established its operations on the continent in Ghana in 1995 and has since come a long way in growing its Agent network to reach both urban and rural communities. By 2000 the network had expanded to reach over 2,300 Agent locations. Over the subsequent eight years that growth was further expedited with the Agent network across Africa growing more than six fold to reach more than 15 000 Agent locations to date .

In Ghana, Western Union’s first African market, network growth has been driven by a focus on consolidating relationships with existing Agents and extending Pan-African group level agreements, leading to network expansion of close to 70% in the first half of 2009.

Renewals with large historical Agents such as Poste Maroc, who simultaneously celebrated a decade of cooperation with Western Union whilst renewing their contract for another multi-year term, are key to maintaining existing network coverage.

“Leveraging pan-regional group level agreements with institutions such as Ecobank, Kenya Commercial Bank, Standard Chartered Bank and Access Bank not only allows us to extend our Agent network into further countries through the existing footprint of Agents with a presence across multiple African countries, but also to accompany the expansion of such Agents into new markets,” said Ferrant.

In Rwanda, the pending roll-out of Agent locations under a recently signed agreement with Banque Populaire de Rwanda will see the network coverage across the country more than double.

In addition, the roll-out of the Agent network in South Africa is on track having exceeded 100 Agent locations in the second quarter of this year.

“Throughout the first half of the year, our three-fold strategy of renewing existing Agents, extending our Pan-African agreements and signing new institutions has delivered significant network growth and we are confident that our continued focus on these areas, as well as the execution of agreements with Vodafone and Zain to offer mobile money transfers in key African markets will extend our reach considerably in the second half of 2009,” Fellahi concluded.