Mobile banking turns cashiers into tellers

South Africa's cellular operators have been trying for years to crack the mobile commerce code, but they have not been able to repeat the successes they have had in countries such as Tanzania, Uganda and Kenya.

But MTN, working with Pick n Pay, may just have found the key to success at home. This week, the mobile operator and the retailer unveiled a plan to offer consumers, especially those in lower-income groups, access to free banking.

And when they say "free", they mean it: MTN customers who take up the offer do not pay any service fees or transaction charges. If they want a Visa-branded debit card to shop at places other than Pick n Pay and sister chain Boxer, customers will have to pay a one-off fee of R29.

Customers can even transfer money without any third-party fees being levied and they do not have to maintain a minimum balance either.

Pick n Pay customers who sign up for the service do not even have to be on MTN - which could prove key to securing a large user base - although the range of free options is more limited for those who have Vodacom, Cell C or Telkom Mobile sim cards.

Here's how it works. Pick n Pay and MTN sell a co-branded sim card that gives users access to the full range of MTN's prepaid tariff plans for voice and data.

Each time someone with one of these sims recharges at a Pick n Pay or Boxer store, they receive 10% of the recharge value as bonus airtime. They also receive double loyalty points through Pick n Pay's Smart Shopper programme, as well as quarterly rewards of airtime and loyalty points for using the sim.

Pick n Pay deputy CEO Richard van Rensburg said the retailer had given serious thought to launching a mobile virtual network operator along the lines of Virgin Mobile, but decided instead to work with MTN to launch the co-branded sim card and drive mobile banking solutions to its clients.

Shoppers who want to buy goods from Boxer or Pick n Pay dial a special code on their phones. They are then sent a unique number, which they show to the cashier. Customers can also withdraw or deposit cash at the tills, buy prepaid electricity or pay for municipal services.

And a complex Fica registration process in terms of the Financial Intelligence Centre Act is not even needed. Basic accounts, called GN6 accounts, can have as much as R25000 stored in them and be used to make daily transfers up to the value of R1000 - more than enough for the main target market.

Those needing higher limits can produce their Fica documents in the shop. The papers are scanned and stored using a special machine that partner Tyme - part of the Bank of Athens, which has the banking licence - has rolled out nationally.

The CEO of MTN South Africa, Zunaid Bulbulia, claims that this is the first time consumers can get a "fully Fica'd bank account without going into a bank".

"This is the first time there will be a bank account with no monthly fees, no fees for swiping and no need to have a minimum monthly balance. This is pretty compelling and has the potential to get to the eight million unbanked people in South Africa [not using financial services] more so than any other product."

Although Bulbulia said MTN had no plans to become a full-fledged bank, there is little doubt that this latest move represents a direct challenge to South Africa's big banks.

Van Rensburg described the service as effectively giving consumers a "bank without a bank".

It seems to be the smartest approach to mobile money in South Africa so far. The question now is whether MTN and other mobile operators, working with retail partners, can succeed in getting the unbanked into the formal financial services system when the banks have failed so dismally.

Vodacom will announce its plans to relaunch M-Pesa soon. The mobile wallet has been a huge success in Kenya and Tanzania, but it has not taken off in South Africa. That could change with a bit of tweaking - and a real turf war could break out between South Africa's banks on one side and the cellular providers on the other.

What's not to like?

• McLeod edits TechCentral.co.za. Find him on Twitter @mcleodd