Cash to the people
Cellular Technology offering solutions to Africa’s unbanked
ENABLING FINANCIAL SERVICES for people living in outlying and rural regions of South Africa is challenging due to the lack of infrastructure and technology on the ground. It’s estimated 11m South Africans are excluded from the banking sector given their geographic or socio-economic positioning. However, solutions have emerged that leverage the high penetration rate of cellular telephones in SA to provide services to even the most remote of areas and facilitate banking and individual payment systems.
Last week MTN announced it’s piloting its Money Transfer micro-payment service through its MTN Banking division. The system will allow users to buy coupon codes from participating MTN outlets and then SMS those to payees who exchange them for cash. The system competes with the likes of Shoprite Consumer Services’ money transfers offering and the Mzansi Money Transfer.
“The development of this service is a joint venture between Standard Bank and MTN Banking, offering a safe and secure way for customers to send money. The service will allow money to be sent directly to the recipient, removing the hassle and cost of locating a traditional ‘cash-out’ location such as a bank’s branch,” says Tim Lowry, MD of MTN SA.
Codes for MTN Money Transfer can be sent using any method, but MTN is hoping to differentiate its offering by utilising cellphones for services.
Dave Parratt, business development executive at MTN SA, says: “We want to start working with banks and other players in the space to expand the service. Money Transfer is different because it uses phones to go the last kilometre. The pilot programme will allow us to experiment with pricing and identify where value lies. Part of the aim of the pilot is to understand the South African environment in which customers demand a paper receipt. For example, in Kenya Safaricom runs a money transfer service called M-Pesa that doesn’t provide paper receipts. We want to gauge whether or not South Africans would be happy with cellphone-based transactions that don’t provide a receipt,” says Parratt.
“A point-of-sales environment has also been developed for Money Transfer, with two tools: a device that runs our point of sale application and another application that runs on a cellphone.” The latter would enable individuals to themselves become agents of the service, so long as they have a cellphone to run the application on. MTN’s Community Payphone network could also provide a base from which to further enhance the reach to Money Transfer customers. Initially, there will be 14 outlets participating in the pilot.
“MTN is considering charging a flat rate of R10 for transfers. That will be split three-ways: between MTN Banking and the sending and receiving agents. There will also be a cap on the amount of money that can be sent. The pilot will allow us to gauge exactly what those amounts should be,” says Parratt.
Other companies are exploring banking services in a broader sense and using cellular technologies for services, such as account sign-ups, that aren’t currently covered by major banks’ cellular banking solutions. One such company – WIZZIT Bank – was recognised in a book called 101 Innovation Breakthroughs, the only South African business in the publication.
A division of the South African Bank of Athens, WIZZIT offers cellphone functionality for money transfers, airtime top ups, electricity vouchers and other services as a component of its savings account that aims to provide full transactional capabilities to holders. The service attracted more than 50 000 clients within its first two years of operation and eight out of 10 WIZZIT customers had no bank account and had never used an ATM before.
“There are 36m cellphones in SA and it’s estimated 40% of the 11m unbanked people in the country have cellphones – owing to a chronic lack of landline infrastructure in rural and other outlying areas,” says WIZZIT co-founder and director Brian Richardson. WIZZIT allows account sign ups 24/7 from anywhere that there’s cellular reception through a network of field agents recruited from unemployed people in local communities.