Operator-led Mobile Money Services Yet to Gain Traction in S’Africa

Operator-led mobile money services in South Africa have yet to gain traction, the Senior Analyst at Analysys Mason, Devine Kofiloto has said.

Kofiloto noted in a report made available to THISDAY that operator-led mobile money services in South Africa had failed to gain traction because of competition from mass retail chains and banks, which have been more successful in addressing the needs of both the unbanked and banked populations.

The report however pointed out that operators need to reposition their mobile money services in order to appeal to specific use cases that are not being adequately met in the market

Operator-led mobile services have had limited appeal in South Africa, despite attempts to rekindle interest by relaunching them.

According to Analysys Mason’s latest research, the number of active users of operator-led traditional mobile money services in South Africa was under 200 000 in 2015, whereas financial institution-led mobile money services had close to 1 million active users. Vodacom and MTN re-launched their mobile money services in 2014 (following initial launches in 2010 and 2012, respectively) in a bid to spur consumer interest and adoption.

 “We project adoption of operator-led money services to remain low, with the active share of registered users reaching just over 300 000 by 2020.  Intense competition and regulatory constraints have limited operators’ share of the mobile money market.

“South Africa has the highest level of financial inclusion in Africa – 70 per cent of the adult population in South Africa have a bank account and financial institutions are in a better position than mobile operators to offer mobile financial services to their current customer base,” it added.

The report showed that the most–popular mobile money service adopted by smartphones users is First National Bank’s (FNB’s) e-wallet service – a preference expressed by 19 per cent of the respondents interviewed in the firm’s forthcoming Connected Consumer Survey study in South Africa.

International remittances and innovation in advanced wallet services represented an emerging opportunity for operators to differentiate their mobile money offerings.

“Mobile operators can improve mobile money activity rates by facilitating access to the service and improving customer experience. M-money services are not expected to represent an important source of revenue for the majority of mobile operators in the Middle East and Africa (MEA).

However, operators should aim to convert a large proportion of registered m-money customers into active users in order to improve their revenue prospects,” it added.