Mobile money: Why MTN has to get it right this time around
With as many mobile money customers in the rest of Africa as it has SA subscribers, MTN is ready for this new wave of transactions
If it didn’t work the first time, why would MTN’s mobile payments service work now?
That’s the question journalists and analysts have asked since the announcement that Africa’s largest mobile operator has brought its Mobile Money (MoMo) service back to its home country.
Both MTN and Vodacom shut down previous versions of their mobile money services in 2016. Embarrassingly for Vodacom, it had to admit to the local failure of M-Pesa, which is wildly successful in Kenya, with 25.57-million users.
What difference does four years make, the sceptics have asked.
It turns out a lot. Today you can pay at most urban stores using SnapScan or Zapper — pure-play apps that let you settle a bill by scanning a QR code. Or you can tap a Samsung smartphone or one of its smartwatches using Samsung Pay. I regularly use Fitbit Pay, using my Versa 2 smartwatch (at least twice in December when I left my wallet at home).
But all of these fantastic payment services use a smartphone and a credit card. That is an immediate barrier to entry to millions of people in Africa who are simply too poor to afford either a bank account or smartphone, let alone have credit.
MTN thinks 11-million people in SA fall outside the formal banking world. It is those people that MoMo would like to bring into the digital and financial world. MoMo, which officially launched in SA last week, is a partnership with UBank that will let people send and receive money, buy airtime and prepaid electricity, and pay for their municipal bills and DStv subscriptions.
MTN already has 30-million MoMo customers in 14 African countries. It has honed its financial services, which are now central to CEO Rob Shuter’s vision for the mobile operator.
"Mobile is central for driving financial inclusion," Shuter told the FM last year. The former banker sees a great opportunity in Africa, where traditional bank accounts are rare and where cost-effective financial services are even harder to find.
Having managed the European operations for Vodacom’s holding company, Vodafone, Shuter has seen the waves of disruption heading directly for an industry that built itself on the fat margins of voice calls.
Data has evolved to be the new voice, as data revenue now eclipses voice sales.
Now financial services are the new thing for a telecommunications industry trying to avoid becoming nothing more than "fat pipes" that provide access to the customer for apps like Facebook, WhatsApp and Twitter.
Mobile operators are increasingly offering financial services, starting with low-hanging fruit in SA (funeral cover) and expanding into payments to other people (or companies) and eventually more sophisticated offerings.
Cellular networks have built an ecosystem designed for voice calls, says Shuter. But he believes operators are ideally suited to provide the next wave of digital services and financial inclusion.
Anyone buying airtime understands how they are converting cash into another form of value, Shuter thinks, making it easy for them to understand how mobile money works.
"They know they can put money in and have airtime in an e-wallet. The core principle of mobile money is to convert airtime to e-money, so people can then also send money and pay bills, school fees and other expenses."
Already over half of all mobile money services in the world are in Africa, according to the GSM Association.
Calling himself "stubbornly optimistic", MTN SA CEO Godfrey Motsa thinks MoMo will succeed this time because of what MTN has learnt from past mistakes. "We may have failed to get what we wanted before, but today we know what to do. We are in 14 countries and we have over 30-million customers. We have as many mobile money customers as we have customers in SA."
Calling it "a tried-and-tested platform", he says MoMo is a "serious business" for MTN.
MTN quotes the Independent Communications Authority of SA’s "State of the ICT Sector in SA 2019" report that shows smartphone penetration has reached 80%.
Those stats make mobile money hard to ignore.
Felix Kamenga, MTN SA’s chief officer of mobile financial services, says: "The beauty of MoMo is that we have struck a balance between building world-class safety and security measures without compromising the ease of use and simplicity of the platform."
One of MTN’s other initiatives is an instant messaging service called Ayoba, which has over 1-million users, the network says. Currently only available for Android, it was launched in 2019 in eight of MTN’s markets — Cameroon, the Republic of the Congo, Ivory Coast, Nigeria, Ghana, Guinea-Bissau, Afghanistan and SA — and is available in multiple languages including Zulu, Xhosa, Yoruba, Swahili, Hausa, French and English. MTN intends for it to be more than a competitor to WhatsApp; it plans to open up the platform for other developers. Ayoba is zero-rated, which means its users can use the channel without consuming their own data bundles.
As Shuter told the AfricaCom conference in Cape Town late last year, he wants MTN to be "the biggest provider of mobile financial services in Africa". It appears to be well on its way, and is determined that SA won’t be left behind.