MVNO licensee Equity Bank, Kenya’s largest financial institution by customer base, has announced that all of its account holders will receive a special SIM card, known as SIM Skin, in order to access its MVNO services. The slim SIM card, which takes the form of a 0.1 mm film, can be layered on the active side of standard SIM cards without interfering with their operation and turn the user’s phone into a dual SIM equivalent. The cards will have Near Field Communication (NFC) capability that will enable them to be swiped on point-of-sale devices. The bank plans to issue these SIM cards to its customers free of charge. It will operate as an MVNO on Airtel Kenya’s network and is expected to launch mobile services from July 2014. It will offer voice, SMS and data in addition to financial services.
Equity Bank, which received its MVNO license in April 2014, is taking the fight to both mobile and financial service providers. Market leader Safaricom owes its strong position (over 60 percent market share) to its extremely successful mobile money platform M-Pesa. As an MVNO, Equity Bank plans to enable users to apply for loans, move money, pay bills and carry out cross-border transactions, which implies that it will compete directly with M-Pesa and M-Shwari (Safaricom’s mobile loan service in partnership with Commercial Bank of Africa). By making a free SIM available to all 9 million of its customers, Equity is easing its entry into the market. Existing barriers may also be overcome by the SIM Skin functionality, which eliminates the need for users to switch from their existing mobile operator in order to try Equity’s mobile financial services. Furthermore, Equity is leveraging its strengths as a traditional banking provider to offer lower rates—it is offering money transfer at 1 percent of transaction value with a cap of KES 25.00 (US $0.28) on any amount which is significantly lower than the rates charged by M-Pesa, especially on higher value transactions.
Hosting Equity may also prove beneficial for Airtel, since it may affect Safaricom’s dominance. Furthermore, if Equity’s financial services become popular, increased use of its services will also translate into increased revenues for Airtel as the host MNO. And because the government has mandated that all public transport vehicles use cashless payment systems from July 1, 2014, there should be further demand for mobile money services. Equity has already partnered with Google for its Beba Pay cashless prepaid card, which allows cashless payments for goods and services and can use mobile money transfers for top-ups, and Safaricom has a service called Lipa na Pesa. Overall, the Kenyan mobile market will see increased competition in the coming months.
“While it is not clear whom Equity Bank has partnered with for its SIM Skin cards, this technology is reminiscent of products launched by Taisys Technologies and Digitech Communications-owned BiBiTel. Smaller operators in particular, can look to such products to bring about significant changes in their markets, as Equity Bank is attempting to do. With its product, BiBitel is already targeting the international calling segment in the U.S., the U.K. and Germany. Such products have potential in emerging markets, as well.”
Padma Ramanathan, Research Analyst at Tarifica
The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues: http://www.tarifica.com/TarificaAlert.aspx