Business Day (Johannesburg)

1 September 2005

South Africa: Easypay Hopes to Revolutionise Airtime Sales

Johannesburg — EASYPAY could revolutionise the way cellular airtime is sold by recruiting thousands of roaming entrepreneurs armed with a kit to transfer talk time instantly to end users.

The entrepreneurs will buy a starter pack containing a special sim card that lets them buy discounted bulk airtime and sell it to end users via SMS.

Customers can pay for as little as R12 of airtime in cash, and will instantly receive an SMS telling them they have been topped up.

The voucherless top up system threatens to destroy the market for prepaid airtime cards, which are costly to produce and distribute, subject to theft and require the customer to visit a physical retail outlet.

To ensure the scheme wins grassroots support, EasyPay has teamed up with the Mineworkers Investment Company (MIC), which holds 17% of its parent company Prism.

MIC will recruit thousands of retrenched or disabled miners as the first distributors.

All they will need will be a cellphone with the special sim card, giving them a low-entry business that should grow in direct proportion to the effort they make.

Roaming airtime entrepreneurs using EasyPay's technology could go from house to house, stand on a street corner, or sell to fellow passengers in a taxi, says Prism's operations director, Mike Serrao. They will be able to distribute airtime from all three operators using one cellphone, if technology issues can be resolved so one sim card can handle the different networks.

EasyPay and MIC will set up a new company to train the entrepreneurs and to buy airtime from the networks.

The networks give a profit margin of 10%-14% to their distributors, and EasyPay will keep only a fraction of that so the entrepreneurs can take the bulk.

EasyPay first launched the voucherless top up system in a pilot with Smartcom, a cellular operator in the Philippines.

"The success has been phenomenal. Smartcom does an average of 4-million recharges each day through 600000 informal vendors," says Serrao.

Then it teamed up with MTN in Nigeria, and 100000 distributors signed up in the first year.

MTN now plans to replicate the system in Cameroon and Swaziland as well as in SA.

The new service could create 9000 jobs for every 500000 prepaid users. With at least 15-million prepaid users in SA, that could create 270000 new jobs.

The scheme should be launched early next year, once EasyPay has finalised distribution deals with the operators.

At the moment prepaid airtime is sold through scratch cards, ATMs and point-of-sale devices. "Scratch cards are a pain for the operators, so they want secure electronic distribution so they can phase out scratch cards altogether," says Serrao.

Other companies in the airtime distribution market have asked EasyPay to allow them to use handset-based vending to expand their reach. Without that, they risk losing their business to informal vendors if the scheme is as successful as EasyPay expects.

EasyPay had spent a "substantial" amount on developing the Sim card, the server technology to handle the transactions and security software to eliminate the risk of fraud. Now it is talking to a major international supplier of networking equipment to see if its technology can be built into the equipment for global sales.

EasyPay already supplies prepaid airtime for point-of-sale terminals in supermarkets, and supplies the technologies to process credit card transactions and to pay utility bills at the check-out counter.

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