Mxit is on the move with moola
Standard Bank and social network Mxit launched a new mobile money service in Johannesburg yesterday.
Describing themselves as Africa’s largest social network and its largest bank, Mxit and Standard Bank yesterday launched a new mobile money service, called Mxit Money.
It uses the existing Mxit Moola system but makes it easier for the 10-million active Mxit users in South Africa to transfer money and pay for prepaid cellular airtime and electricity. Users can transfer money to each other and withdraw funds – much like Kenya's highly successful M-Pesa.
"This is for an audience that doesn't have laptops, smartphones, or credit cards," said Mxit CEO Alan Knott-Craig. When Mxit launched, he said, it focused on free messaging; now it is focusing on payments.
"This is not a South African play. It is for the whole continent. Lighting it up with communication was the first step, lighting it up with payment is the next level," he said at the launch in Johannesburg.
Money is deposited into the system using Standard Bank's Instant Money, which has a R9.95 flat fee. Withdrawing money costs a standard R7.
Mxit makes 5% on selling airtime and 2% on electricity, but charges no other fees.
"We don’t make any money, because it plays towards people making more content purchases. We are not trying to trick anyone," he added. "People look a little weird at me, especially shareholders, when I say that. We want to get money into our systems, as simply as possible," Knott-Craig said.
John Campbell, Head of Beyond Payments which is Standard Bank’s innovations division, said the potential is "huge".
"This is simply because it now allows people with a phone and no banking relationship – or no desire to have a banking relationship – to move money around, to store money (although this is not a savings products) and participate in a mobile economy," Campbell told The Times. Africa has 1-billion people but only 50-million bank accounts, he added.
Mobile money is one of the most exciting developments in communications technology and financial inclusion, in which Africa is leading the way.
Some 80% of mobile money transactions globally are in East Africa, says the GSM Association. In Kenya M-Pesa is a runaway success with 40% of its GDP passing through it. In South Africa M-Pesa has about 1-million registered users.
"In Tanzania it's going great guns: 121% year-on-year growth, 3.6-million users, and accounts for 12% of service revenue," said Vodacom spokesman Richard Boorman.
According to research presented by Mxit, South Africa will have 14-million cellphone users making R7-billion in mobile payments by the end of this year.
Money can be deposited or withdrawn into Mxit Money at some 8 000 Standard Bank access points, more than 600 Spar tillpoints and, from September 1, at Standard Bank ATMs, said Kobus Ehlers from Stellenbosch firm FireID, which is involved in building the payment system.
Arthur Goldstuck, MD of researchers World Wide Worx, said: "It's a superb initiative. The biggest barrier to mobile money uptake is its complexity and this simplifies it tremendously".
He said would be successful "particularly because its bank agnostic. Although Standard Bank are the first on board, they won’t be the last. The most powerful effect this will have is making the cost of money transfers transparent to the user and that will shake up the money transfer market".