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Cape Town - Vodacom's re-launch of virtual money programme M-pesa is not a reaction to rival MTN's deal with Pick n Pay, but rather a service designed to expand mobile payments in SA, the operator said.
"We've been working on the redesign of M-pesa for the past 18 months by assembling a new M-pesa team, bringing in external expertise in banking and mobile payments and studied the factors which held the service back in South Africa and those that made it a success elsewhere", Herman Singh, Vodacom's managing executive for M-Commerce told Fin24.
Singh has previous experience as the CEO of Beyond Payments at Standard Bank, according to his LinkedIn profile and is bullish about the prospects for the success of M-pesa in SA.
He expects a growth curve reaching 10 million South Africans in five years for the mobile money programme.
However, Vodacom may have stiff competition in the mobile money space with MTN's offer which was launched with Pick n Pay.
Revamped service
The MTN service is fee-free for purchases at till points, to send money to MTN subscribers, and sending airtime - even to other network customers.
M-pesa was first launched in Kenya in 2007 and Vodacom launched the service in SA in 2010, but the South African experience did not match the success on Kenya.
Singh said that the newly revamped service addressed some of the problems and was set for success in the country.
"We first launched M-pesa in SA in 2010. We have totally revamped the service which addresses key areas: Distribution, registration, functionality and loyalty."
The introduction of mobile wallets on cellphones could serve to create economic inclusivity. (Duncan Alfreds, Fin24)
Vodacom Group CEO Shameel Joosub went further, hinting that the service was going to disrupt the traditional banking sector in SA.
"We wanted to change the way South Africans handle money for the better. 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," Joosub added.
Banking sector
SA has a relatively sophisticated banking sector but the introduction of mobile money management could nevertheless serve to help millions of people participate in the economy.
One challenge is that these platforms are exclusive, whereas interoperability could free up people to use any service to move money where they wished.
Virtual wallets can offer security, make payments and allow users to easily send money to distant relatives. But people will need to be educated about the potential of the service, said Singh.
"Customers will be informed about PIN security and retrieving PIN codes as well as money in the customer's M-pesa wallet is safe, even in the event of loss or theft of a cellphone."
Singh explains why M-pesa is a revolutionary concept in this News24 Live video:
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