Another go at making Kenya’s M-Pesa payments platform a success in South Africa

Kenya’s M-Pesa is making a comeback in South Africa after failed attempts four years ago. During its initial launch it had only a million subscribers and had to be shut down. This is what happens when executives cut and paste systems and assume users would adopt it the same way.

M-Pesa was first launched in Kenya in 2007 by Safaricom, Vodacom’s sister company. At present, M-Pesa is used by more than 18m people in 13 countries for mobile banking and money transfer services.

The official statement said: “Vodacom 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 hasn’t so far enjoyed the overwhelming uptake seen in markets like Kenya and Tanzania.”

No cookie cutter solution

To re-launch M-Pesa, the company has partnered with Bidvest Bank and Visa. It has also ended its agreement with Nedbank, which was its launch partner for M-Pesa in 2010.

Now the registration process is significantly quicker. Potential users don’t have to visit customer care to submit an ID for registration they can type in their ID and submit via USSD.

The new M-Pesa service offers customers a Visa card and a voucher system for cash reload.  The voucher system allows people to easily convert cash to M-Pesa in a familiar process as adding airtime top-up at all Vodacom shops, selected spaza shops and at selected retailers. Beside mobile money, the card gives South Africans an additional functionality to access nearly 27, 000 ATMs and 240, 000 merchants.

According to Vodacom, in Kenya, over 70% of the adult population uses M-Pesa. And more than half of the customer base of Vodacom Tanzania is registered for M-Pesa which does 51 million transactions, and this group accounts for more than US$1 billion in activity per month.

Distribution, registration, functionality and loyalty

By re-working its distribution strategy Vodacom plans to engage with South African to reach the same level of participation that we’ve seen in East Africa.

Vodacom Group CEO Shameel Joosub said: “While distribution and registration are key enabling factors, the heart of the revised M-Pesa is the functionality. We’re excited to be working with two key new partners, Bidvest Bank and Visa, whose skills and expertise have allowed us to add entirely new functionality to M-Pesa that addresses the specific needs of the South African market.” He further added, “Each country has its own unique needs and challenges, and it has been a learning process getting to understand exactly what will and what won’t work in South Africa. We’ve taken the experience and knowledge gained from the past four years and have used this as the basis for a comprehensive redesign of M-Pesa for the South African market.”

According to Joosub, the company is in a process of aggressive roll-out targeting about 30, 000 retail outlets to distribute its service before the end of the year. In order to make M-Pesa more successful in South Africa Vodacom will be focusing on four major areas: distribution, registration, functionality and loyalty.

In 2010, the launch had roughly 800+ partners. The revamped M-Pesa service has a platform of 8, 000 agents at both informal outlets and at major retail partners. This is 10x bigger than the initial launch four years ago.

In Kenya, Safaricom’s greatest assets have been the number of agents in its network across the country, not just in city downtown but also in the most remote corners. Taking a leaf out of that, Sameel said, “It’s not good enough to have an agent at the nearest big town or at a handful of big retail outlets. Kenya and Tanzania taught us that if you need to take a taxi to use the service, it will fail. Instead, you need to have agents where people live and work.”

As an incentive for the initial users Vodacom will rewards customer for using this product by doubling their airtime when purchasing airtime via M-Pesa, and free airtime for activating the M-Pesa Visa card.