SA:Cellphone is virtual bank as mobile money gains

JULY 13,2014.

BUSINESSDAYLIVE.

MOBILE operators and banks should provide incentives to customers to drive the uptake of mobile- money services, wireless communications network provider Ericsson said this week.

The rapid convergence of mobile and banking technology, which started with simple functions such as money transfer, is increasingly making the cellphone a virtual bank in itself.

Mobile money is gaining traction in many markets in Africa as millions of people without banking accounts sign up for the service. According to global mobile network industry body GSMA, 52% of mobile-money services are in sub-Saharan Africa.

Ericsson estimates that by 2016, the mobile commerce market is expected to reach $800bn worldwide. Kenya, Uganda and Tanzania are some of the few countries in Africa that are leading the pack with mobile money.

In Uganda, an estimated 9-million people use mobile banking to exchange, save and spend money, instead of handling cash — reducing both the risk of theft and the need to travel. In South Africa, mobile-money take-up has been slow compared to other countries in Africa mainly because of the expansive ATM and bank infrastructure available.

Ericsson’s head of mobile commerce sales in Europe, the Middle East and Africa, Rajiv Bhatia, said there was an untapped opportunity to drive activity and loyalty in mobile money using mobile prepaid airtime.

Airtime can be used to promote usage in several ways such as encouraging people to have a minimum amount of money in their wallets and rewarding them with better data and airtime bundles for use of their mobile-money wallets.

"Operators and financial institutions are battling to trigger activity in dormant wallets," Mr Bhatia said.

Operators and financial institutions could replicate the loyalty programme of credit card providers through the use of airtime, to encourage consumers to use mobile money, he said.

"There are opportunities to grow this business, especially among the migrant population, which still uses informal means to remit cash. Banks should forge closer ties with operators, who have an expansive distribution network to encourage adoption and drive usage," said Mr Bhatia.

Last month, MTN and Pick n Pay launched a new mobile-money product that aims to bring free monthly transfers to millions of people without bank cards.

To register for mobile money, customers will have to purchase a Pick n Pay and MTN co-branded SIM card. The SIM card will reward customers with an extra 10% airtime when they top up at Pick n Pay and Boxer stores.

Users will also earn double Smart Shopper points at Pick n Pay when using Mobile Money to purchase goods. MTN and Pick n Pay also launched a Mobile Money-branded Visa debit card, allowing mobile-money customers to draw money at ATMs.

MTN CEO Zunaid Bubulia said the Mobile Money innovations were part of MTN’s "continued commitment to revolutionise banking and drive economic inclusion, and we look forward to its take- up by South Africans".

Vodacom is revamping its M-Pesa mobile-money offering, which it launched two yeas ago.