Vodacom and Tigo Bring Mobile Money Interoperability to Tanzania

Stockholm-based telecommunications and media company Millicom announced this week that the 4 million customers of its Tigo Pesa mobile money service in Tanzania will be the first in Africa to be able to exchange money with the 6 million customers of Vodacom’s M-Pesa mobile money service. A similar launch in 2014 allowed Tigo’s customers to transact similar services with Airtel’s Money and Zantel’s Ezy Pesa customers. “With Tigo Pesa, customers will now have Africa’s first universal mobile money exchange system,” said Millicom Executive Vice President for Africa Arthur Bastings. “They will be able to safely and securely transact with millions more people across the country. It’s another first for Tigo Pesa and Tanzania.” Other Tigo Pesa innovations in the past year include cross-border mobile money exchange with currency conversion included and quarterly returns on Tigo Pesa balances.

Mobile money services offered by the four main MNOs in Tanzania—Airtel, Vodacom, Tigo and Zantel—have been growing steadily for the past five years. In a country where 90 percent of the population do not have bank accounts but cell phone penetration is 75 percent, it is not surprising that roughly half the adult population is already using the mobile money services offered by mobile operators. Last year Tigo, the second-largest operator in Tanzania, was able to broker interoperability deals with the next two smaller operators, Airtel and Zantel, giving their subscribers a wider range for their mobile money transactions. This recent deal with Vodacom, Tanzania’s largest MNO, was brokered after more than a year of negotiations and is a huge win for subscribers.

It is interesting to note that it is the smaller MNOs that stand to gain more from interoperability than the larger ones, as the smaller networks gain access to a proportionately larger subscriber base and the larger ones lose some of their market advantage. However, as we have written before, it is clear that everyone stands to gain from interoperability: the consumers, merchants and government agencies who can make and accept payments more easily, as well as the banks, MNOs and other service providers that can grow revenue by offering more products. So while there will be significant challenges ahead from competing interests in less developed markets, as those mobile money markets mature and MNOs reach the saturation point with their own mobile money users, we expect to see more interoperability deals brokered in other African countries.

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 or to speak with the research team: http://www.tarifica.com/contactus.aspx