Vodacom and Safaricom’s M-Pesa mobile money platform has ambitions to do more than just mobile money services – but don’t call it a digital bank.
Speaking at the BusinessTech Digital Banking Conference on Thursday (5 March) managing executive for M-Pesa at Vodacom, Chris Williamson said that the mobile platform’s ambitions lie beyond mobile money, with the group rolling out things like enterprise services, group lending and other financial services.
He said that while the platform is comfortable being in the “mobile money” market – and doesn’t have plans to become a digital bank (which operates on a very different business model) – it does need to keep evolving with the needs of the predominantly African markets in which it operates.
This does not mean a relaunch for South Africa, however.
Vodacom first introduced M-Pesa to South Africa in 2010 – and while the initial take up was strong with more than one million people signing up, it never enjoyed the overwhelming uptake seen in markets like Kenya and Tanzania.
By 2014, use of the service was so low, that Vodacom relaunched the brand with adjusted functionality. In 2016, it was shelved, after failing to get the “critical mass” needed to sustain the service.
“I know everyone is going to ask why M-Pesa was shelved in South Africa,” Williamson said.
He noted that there are a variety of reasons for M-Pesa’s failure to launch in South Africa – from mobile competition to the developed financial services industry – but underpinning everything is the regulatory environment.
“According to the GSMA, which is kind of the authority on mobile money around the world, South Africa has one of the worst regulatory environments for mobile money, so that makes it extremely challenging,” Williamson said.
He said that M-Pesa is in constant communication with central banks and governors wherever it operates, to ensure that they are comfortable with the way the services are run.
While M-Pesa’s mobile money features have been shelved in South Africa, many South Africans are still using the platform’s services in other ways.
‘You may not know it, but 17 million Vodacom customers are using its financial services in some way – things like airtime credit, short-term insurance, etc.
“We are broadening these services all the time, with things like credit offerings for SMEs, and mobile point of sale, which is coming soon.”
This is also part of M-Pesa’s play in Africa. Despite the service’s failure in South Africa, it continues to run very successfully in other African markets, with functionality now extending to enterprise payments in some countries.
Functionality is also diversifying – Tanzania’s M-Pesa launched with overdraft facilities and Islamic services in markets where Sharia laws are in place. In markets like Mozambique and Lesotho, group savings (similar to stokvels) are also available.
As part of its strategy in all its markets, it is opening up its API to allow deeper integration between different services, as well as moving into cloud platforms where regulations allow.
In the longer term, it wants to become an over-the-top player, that won’t be limited to the Vodacom and Safaricom networks but available to all networks.