SA banks embark on tech drive

Johannesburg - Nedbank's move to roll out the M-Pesa cellphone payment system has been in step with its rivals' bids to bolster technology-driven banking services to customers.

On Tuesday, Nedbank announced it has partnered with cellular technology group Vodacom to launch M-Pesa in South Africa. M-Pesa has been successful elsewhere in Africa, for instance in Kenya, where specifically the lower end of the market has had limited access to banking services.

M-Pesa enables account holders to transfer funds via cellphone to pay for goods and services.

"Both Nedbank and Vodacom are confident that M-Pesa is going to change the lives of 'unbanked' South Africans and we are looking forward to the imminent launch of the product," said Vodacom South Africa MD Shameel Joosub.

Nedbank's announcement came hot on the heels of First National Bank's scoop to secure an exclusive licence to launch international payment gateway service PayPal in South Africa.

Not to be outdone, Standard Bank has also recently introduced a new cellphone payment technology called Instant Money, in partnership with retailing group Spar. This will enable consumers to pay by phone for groceries and to send money to any person in South Africa who owns a cellphone.

"PayPal is the big one," said Brett Commaille, CEO of technology venture capital firm Invenfin. He said Paypal's ability to facilitate international transactions was likely to be an enabler of new South African businesses.

Cellphone wallet a hot new trend

John Campbell from Beyond Payments, the firm behind the Instant Money system, is upbeat about the developments on both the mobile money and international payment platform scene.

"There are two things you need: one is to have an e-currency and the other is to have the ability to spend it or move it," he said.

Campbell said his company had observed a number of interesting shifts in consumer behaviour when it comes to online transacting.

He said one of the biggest recent trends was a move away from credit cards in online transactions to using a payment gateway or cellphone wallet.

In terms of products aimed at the lower end of the market, Campbell said bank accounts remained an expensive way to transact. He added that banks were likely to become more of a "feeder" for previously unbanked individuals.

"It's a way for people who don't have a bank account to gain access to financial services," said Standard Bank SA CEO Sim Tshabalala.

"At present financial services are not always available in rural areas, mainly because of the expense of rolling out banks and services in less affluent places. This has meant that most people in rural areas operate on a cash basis."

- Fin24.com