M-Pesa has relished an exceptional accomplishment in its home country Kenya where it was launched by Safaricom with more than 20 million subscribers.
In Tanzania, it’s the second biggest market boasting some 7 million subscribers, but with just one million subscribers at the end of March 2015—the acceptance of the mobile money platform MPesa has been labelled a failure in South Africa.
A report by Genesis Analytics, a South African research consultancy, shows how South Africa’s three major retail banks–Absa, First National Bank and Standard Bank–have individually increased their share of low-income customers by opening up entry-level bank branches and banking kiosks in remote areas, bringing banking services closer to where people live. Additional, South Africa’s financial system provides a number of options other than M-Pesa, for its unbanked population. First National Bank’s e-Wallet allows anyone with a valid South African cellphone to send and receive money, even if they don’t have a bank account–and major retailer, Shoprite, has a countrywide money transfer service priced at just $1 per transaction. South Africa, compared to Kenya and Tanzania, has a more developed banking market. Local banks have thrived in providing dependable and easily accessible banking services to low-income customers. During its launch in Kenya, MPESA effectively dominated the unbanked market before other players like Airtel Money, Orange Money and Mobikash with over 60 000 agents making the platform ever-present in the country. Poor distribution and marketing in South Africa have also contributed to MPesa’s failure to launch in the South African market. At the time of M-Pesa’s relaunch in South Africa last year, it had 8000 agents as compared to Kenya. So unlike in Kenya–South Africans have more banks accounts than mobile money accounts, its financial system provides a number alternatives other than M-Pesa, for its unbanked population.
First National Bank’s e-Wallet permits anyone with a valid South African mobile phone to send and receive money, even if they don’t have a bank account, Shoprite a major retailer in South Africa, has a countrywide money transfer service priced at just $1 per transaction. Financial regulations like FICA, have set time-consuming administrative requirments for foreign nationals and South Africans wishing to do cross-border mobile money transfers which has also contributed to MPESA’s slow growth.
An op-ed published last week, South African technology analyst, Hilton Tarrant, argues that after three unsuccessful launch attempts, it is uncertain why Vodacom–a subsidiary of the UK-based company, Vodafone–continues to insist on making the platform work in South Africa.
Tarrant adds that Vodacom has also failed to outline what it wants M-Pesa to be in South Africa.
During the course of its relaunch attempts, Vodacom has marketed the platform differently: first as a mobile money solution, then as a mobile money wallet, which allows customers to store their money safely, and finally at last year’s relaunch, as a platform that allows you to swipe and buy with a Visa card linked to your mobile phone. This, according to Tarrant, has sent mixed signals to Vodacom’s M-Pesa customers.
“It’s trying to be everything to everyone. There’s no clear “job to be done” and that’s evident in the marketing,” writes Tarrant.
South Africa’s largest mobile operator, Vodacom, may also be under pressure from its parent company, Vodafone, to replicate M-Pesa’s east African success story in the country, despite the clear differences in these markets.