analysisBy Russell Southwood
London — Safaricom's M-Pesa service in Kenya is heading towards 2 million users and has really got first mover advantage. But it is facing competition in Tanzania from an upstart challenger that aims to become the non-proprietary M-Money service leader. Meanwhile in Ghana Afric Express has been trialling its service with university students and is set to launch next month. Russell Southwood talked to the newcomers.
Tanzania's e-Fulusi scored a coup by getting its M-Wallet service adopted as Z-Pesa by Etisalat's Zantel ahead of the M-Pesa launch in Tanzania. In the first week it got 2,000 customers and the average account size was TS16,000. But it has ambitious plans to roll-out its non-proprietary service Mobi-Pawa and implement merchant transaction systems. It wants to offer it as a VAS service to all operators. It has an applications service licence from the telecoms regulator TCRA. On the financial side, it has a letter "no objection" from the country's Central Bank and has had to open a trust account with a merchant bank. The Central Bank's main concern was that transactions were traceable and were cleared through the banking system.
In a country with no national identity system, Know Your Customer (KYC) procedures are particularly important and e-Fulusi is seeking to meet this need. There is a limit of TS50,000 and it has to monitor transactions 24 hours every day and take action on irregular transactions. In theory there is no limit if it follows KYC procedures but it will create an upper limit of US$4,500 per transaction on the basis that more than this would mean the customer should be dealing with a bank. It is also trying to sort out paying interest on deposits so that it can offer savings accounts to customers, something that is currently not possible with a trust account.
The key thing about the services it has devised - according to Managing Director Nadeem Juma - is that they are not tied to a particular operator or bank. The current service for Zantel is serviced by a small bank in Tanzania called FBMA that has had extensive experience with different payment systems. Although initially the Central Bank insisted that everything be run out of a single trust account with one bank, it has now indicated (clearly aware of emerging competition issues) that other banks can be bought on board. It is also building in integration with bank information reporting systems to allow confidential, real-time updating of its M-transactions.
The Mobi-Pawa service in Tanzania has had a relatively slow take-up but e-Fulusi's Juma estimates that there are at least 900,00 customers who will want to make transactions and wants to set up a network of 3,000 agents to reach them. Average account size is currently TS1,000. It will clearly need the kind of marketing an investor or an operator or a bank partner would bring to ramp up take-up levels.
It is also looking for strategic partners for its service beyond Tanzania:"We are looking for partners for Mobi-Pawa and can offer this as a franchise model. A lot of operators have expressed interest and we're talking to a number of them about taking our technology. We've had a lot of interest from Etisalat who are looking at its pan-African potential but we're taking it a step at a time. Zain's One Network would also be ideal for the product."
Backed by US company Pembroke Brokers, Ghana-based Afric Xpress will offer a similar M-Wallet product based on technology from Cyphermint inc configured to suit African markets and squarely aimed at the un-banked. It plans to launch in Ghana but roll out to other countries in West and Central Africa.
You have to register to get the electronic wallet so it meets KYC procedures. Once you have the wallet you can send money to relatives within a country and do things like make bill payments. Importantly you can top up airtime on our phone.
You deposit money into your electronic wallet at a TextNPay agent that are widely deployed across Ghana. Agents are paid a 1% commission on accounts opened and withdrawals up to a US$10 maximum. The minimum account size is very small at 75 pesawas.
According to Marie-Dominique Aboukan, Afric Express Ghana's Sales and Marketing Manager:"It's a volume game. We take a percentage of the transaction and the biller bears the cost because it offers billers speed and effectiveness." The Wallet has a PIN code for security and there are security questions - as with a bank - when you ring customer services which are operational 24/7.
The partners in its pilot trial are: utility companies, satellite Pay-TV companies, telephone companies and a university. At the latter, students in the trial can pay their academic fees. It has about 1,000 students trialling it at Lagon University and it started at 46 transactions a day but this number has gone up considerably. According to Aboukan:"We give them money to try it because we want to test all aspects of the service before launching." The service is set to launch next month in June 2008.