Europeans Selling Mobile Payments Should Ask Africa for Help

As telecommunications carriers in Europe seek a share of the billions of dollars likely to flow to companies that build mobile-payment systems, Claudio Chiche has a few words of advice: Ask Africa for help.

“I pay my electricity, water and cable TV with my mobile phone,” Chiche, chief commercial officer of Mozambique carrier Mcel, said Monday as he browsed handsets at the Mobile World Congress in Barcelona. “Here, I can’t do that.”

Apple Inc. Chief Executive Officer Tim Cook has declared 2015 “The Year of Apple Pay,” and Samsung introduced a similar service for its phones at MWC this week. If those offerings gain traction, carriers such as Vodafone Group Plc, Deutsche Telekom AG and Orange SA could fall far behind in a market set to at least double in the next five years to more than 50 billion euros ($56 billion) in Europe, according to Forrester Research.


Samsung and Apple have spurned wireless carriers, instead teaming up with credit-card companies such as Visa Inc. and MasterCard Inc., whose Chief Executive Officer Ajay Banga is set to speak in Barcelona on Tuesday.

In Africa, by contrast, it’s the carriers -- mostly units of the European giants -- that are leading the way. At least 40 million Africans use mobile-wallet services from Vodafone’s Vodacom and Safaricom subsidiaries, units of France’s Orange, and Millicom International Cellular SA.

Kenya, Tanzania

“A lot of the African markets are much better and connected” in mobile payments, said Greg Reeve, chief operating officer for mobile financial services at Millicom, a wireless carrier with operations in six African countries. “You have to then look at more mature markets and say, ‘Why aren’t they doing something like that?’”

Vodafone’s Safaricom subsidiary has about 20 million mobile-wallet users in Kenya -- nearly every adult in the country -- and its Vodacom unit has 7.6 million customers for its M-Pesa payment service in five countries.

In Tanzania, an evolution of M-Pesa called M-Pawa allows customers to deposit cash through a phone and earn interest of about 5 percent. M-Kopa Solar allows Kenyans to buy electricity and light their homes using a mobile phone.

Africa Success

The European carriers’ success in Africa was based on the continent’s shortage of affordable banking services. Consumers seized the opportunity to transfer money cheaply and quickly.

“It’s the only way I can send my mother a weekly allowance,” Faridah Atieno, a 41-year-old nurse in Nairobi whose mom lives a seven-hour drive away near Lake Victoria. “Otherwise I would be waiting to find someone or going there once a month.”

Europeans, who mostly have bank accounts and credit cards, have shown little interest in mobile payments. Deutsche Telekom last May started in Germany a service called MyWallet which the company says has been adopted by fewer than 100,000 of its 39 million mobile customers.

Orange, which has more than 12 million users for Orange Money in Africa and the Middle East, says it has sold phones equipped with mobile-payment technology to 3.5 million customers in France, but it declines to say how many of them actually use the service. The company will expand its European mobile money products this year and may offer customers services such as micro loans of as much as 200 euros, said Thierry Millet, vice president of mobile payments.

In 2013, Vodafone started in Europe its SmartPass mobile-payment feature, which lets users make purchases of less than 20 pounds ($31) by tapping their phone on a payment terminal. Last year it added the capability for users to add supermarket and gym-membership cards onto the mobile wallet. The company declined to provide user numbers.

Apple’s Lure

In the U.S., Apple Pay started in October and now accounts for $2 of every $3 of purchases using contactless mobile-phone payments across the credit-card networks of Visa, MasterCard and American Express. Users pay for purchases by holding an iPhone near a cash-register reader with their finger on the smartphone’s biometric sensor.

Samsung said its Samsung Pay will be accepted at nearly all merchants worldwide, with the service starting in the U.S. and South Korea this summer before expanding to Europe.

Faced with such powerful frenemies in the mobile-payment sector, European carriers may simply focus instead on other services, said Kieran Hines, practice leader for financial-services technology for Ovum Plc.

“They’re increasingly looking for new models outside of payments,” Hines said. “Their ambitions were to be able to take a share of payment revenue and that dream has sort of died, certainly with the launch of Apple Pay.”


To contact the reporter on this story: Christopher Spillane in Barcelona