Barely Legal, Knows Everything

 

There is a Google-full of hype around mobile operators and their payment systems, giving banks a run for their money. However, quietly, quite the opposite is happening in South Africa (SA). Here, it seems that the banks are dominating the mobile payment space and it is the mobile operators that are lagging.

SA has three MNOs and four major retail banks. A mobile high noon is fast approaching. For a while, everyone has suspected that bank killer, M-Pesa, would be coming into town. It was obvious. South African MNO and Vodacom, recently became majority-owned by Vodafone. Vodafone is the power behind Kenya's Safaricom which is the power behind M-Pesa.

Vodafone has already rolled out M-Pesa in its other operation in Tanzania. Therefore, SA had to be firmly in its sights. In anticipation, the local banking heavyweights began arming themselves. With some surprising results. The incumbent mobile money play, MTN Banking (http://www.mtnbanking.co.za/), actually seems to be the least concerned about M-Pesa riding into town because the unit seems to have scaled back on its mobile money operations.

On its website, despite being "MTN Banking," the logo now carries a sub-title which states that it is a "Division of Standard Bank". In addition, further down the page, we find, "The MTN Gold and Titanium credit card programme has moved to Standard Bank as from 1 March, 2009". Remember, MTN Banking (in SA) was a 50/50 joint venture between MTN and Standard Bank. Scratch a little further and we see that Standard Bank is actually up to all sorts of initiatives in this space.

Besides MTN Banking, there is also Mowaly (http://mowaly.co.za/). To paraphrase the website, Mowaly is "a virtual mobile wallet that lets your cellphone buy whatever you need. Mowaly accesses mimoney, an electronic currency powered by Standard Bank". Although Mowaly cannot be found on the Standard Bank website, "powered by Standard Bank", is mentioned all over the Mowaly website.

Then, just to up the game a bit more, in March, 2010, this press release came(http://www.standardbank.co.za/SBIC/Frontdoor_02_01/0,2454,10293765_35108236_0,00.html) from Standard Bank announcing the launch of their Instant Money person-to-person payment system. The new service, "Instant Money, is provided by Standard Bank and will use Spar's 850 stores to reach communities in some of the most remote parts of the country.

The money is sent and received at Spar outlets, using a cellphone to transfer information". This means that SA's largest bank, Standard Bank now has three mobile offerings. One with a MNO, and two across networks. I will say that Standard Bank is probably the current leader in the m-payment space, but it is not alone.

Also in March, 2010, First National Bank (FNB) announced (https://www.fnb.co.za/news/archive/2010/20100325paypal.html) an exclusive tie up with PayPal. As you probably know, PayPal has an extensive mobile payment offering. A month later, in April, ABSA Bank (a member of the Barclays Group), announced CashSend. The announcement described CashSend as "a cheap, safe, easy to use and convenient method to send money to anyone, whether banked or unbanked, at over 5,800 paypoints countrywide.

CashSend allows ABSA customers to send money to anyone in SA with a cellphone number, regardless of which “mobile network the recipient is using or which bank he banks with”. Sounds like M-Pesa to me. Then, at the end of March, 2010, came the announcement that everyone was waiting for.

Vodacom announced (http://www.vodacom.com/news_article.php?articleID=563&pid=media_group) that it had with Nedbank "a joint initiative to bring M-Pesa, the biggest global success story in mobile money, to SA. M-Pesa is an innovative mobile money solution which has already seen enormous success in other African markets, as well as in Afghanistan,; enabling even unbanked customers to transfer money from person-to-person using a cellphone.

As Vodacom's preferred banking partner in the project, Nedbank has engaged proactively with the banking regulator, ensuring that the initiative will meet all requirements set out by the South African Reserve Bank. Therefore, within two months, we have seen major moves from all four of the large banks.

MTN, the largest MNO, has been quiet. Vodacom announced M-Pesa and the third MNO in SA, CellC, has not made any major announcements. I would say that in SA, the banks are definitely committed to be serious players in the mobile money space. They are actively defending their territory and the MNOs seem to be holding back.

In fairness, the South African banks have had a look at what is happening in other territories and have had a chance to put together a defence strategy. Is this a model that other banks in other countries will look at?.