Vodafone Ghana Introduces Mobile Money Installment Plans for Large Purchases

Vodafone Ghana has introduced a new feature on Vodafone Cash, its mobile money platform, that offers customers interest-free, flexible payment options for various products and services, including smartphones, laptops, home appliances and travel packages. The new service, known as Pay Small Small (PaySS), allows customers to make mobile payments over a period of 3 to 12 months when they purchase products and services from any of Vodafone’s partners. 

To subscribe, registered customers of Vodafone Cash must first visit and select an item from a partner’s shop. They can then set up the payment plan using the USSD menu. During the subscription process, the first installment will be deducted from the customer’s Vodafone Cash account, and subsequent payments will be made using the same process. Customers may also make full payment at any given time if they wish to do so, without any adverse consequences. After successfully paying in full, the customer can pick up the item from the shop or enjoy the service by providing a code that will be sent to them. 

Mobile money has been extremely successful worldwide, especially in poorer countries and remote regions where it has been instrumental in n extending liquidity to so-called unbanked and under-banked segments of populations. Sub-Saharan Africa, where the most successful mobile money platform, Safaricom’s M-Pesa, originated, continues to be one of the most important markets for mobile money solutions.

Given that one of the main reasons for mobile money to exist—albeit certainly not the only reason—is to address the needs of economically disadvantaged customers, Vodafone Ghana’s installment option is a natural and, we think, very useful extension of the mobile money concept. Those customers in particular who depend on mobile money not just for convenience’s sake but because they lack access to traditional bank accounts and credit cards are likely to have difficulty making large purchases because of lack of cash on hand.

Vodafone Cash customers can use Pay Small Small to make manageable payments over time for goods and services, on what is essentially a “lay-away” plan. The lack of interest payments, as well as the flexibility that allows the customer to choose whether to pay in 3 month, 12 months, or anything in between, should be quite appealing to these customers.

We believe that by partnering with merchants and service providers in Ghana to make this payment process available to its subscribers, Vodafone will be serving the community, increasing its customer loyalty, burnishing its public image and, of course, promoting the general use and uptake of its mobile money service.

Tarifica is a global SaaS company and a market leader in the real-time collection, analysis and delivery of telecom plan and pricing data worldwide. Through a mix of AI, modeling and market expertise, Tarifica tracks hundreds of thousands of plan and pricing data points daily. No other company tracks more. Tarifica's mission is to continuously convert data into the dynamic intelligence that fuels opportunities for its clients, the world's leading operators, regulators and consultants. 

Learn more about Tarifica at www.tarifica.com.

Facebook Launches Low-Cost WiFi in Kenya

Facebook has activated low-cost internet access in Nairobi, Kenya’s capital, according to a report. The launch, which is part of the U.S.-based internet giant’s “Express Wi-Fi” program, is a joint project with Surf, a Kenyan ISP, and went live about three weeks ago.

The service is currently available in Nairobi and surrounding areas. Express Wi-Fi offers a 10-day package in which users get 100 MB free per day, after which they need to top up through recharge agents. Daily internet bundles cost KES 10.00 (US $0.10) for 40 MB and KES 20.00 (US $0.19) for 100 MB, while weekly Express Wi-Fi bundles cost KES 50.00 (US $0.48) for 300 MB and KES 100.00 (US $0.96) for 500 MB. Monthly bundles cost KES 200.00 (US $1.93) for 1.25 GB and KES 500.00 (US $4.81) for 3 GB. Surf Kenya CEO Mark Summer said that the prices are subject to change subsequent to the launch.


Express Wi-Fi is Facebook’s latest attempt—under its Internet.org initiative—to spread internet access in developing countries, the intent, of course, being to add users to Facebook. Before Kenya, it recently launched in Uganda, Nigeria and India. A previous program, called Free Basics, ran into trouble because by offering zero-rated access to Facebook and selected other sites, it ran afoul of net neutrality principles and was banned by India’s national regulator in February 2016. Express Wi-Fi is different in that it will not zero-rate and there will be no free connectivity.

The question is, will Express Wi-Fi be a genuine threat to mobile operators in Kenya? Its data is certainly much cheaper than that offered by the MNOs: Safaricom sells a 65 MB daily internet bundle for KES 50.00 (US $0.48), and Airtel and Orange charge the same amount for even less data, 50 MB and 40 MB, respectively. However, it is by no means clear what quality level Facebook and Surf will be able to deliver, what the actual footprint of the service will look like and how many hotspots there will be.

Even if Express Wi-Fi delivers on its promises, we believe that there are things the MNOs in Kenya can offer potential customers that Facebook cannot, at least at this point. Beyond the idea of cellular data versus Wi-Fi, operators in the African markets have discovered the power of mobile money services—notably Safaricom’s M-Pesa—as a way of attracting and keeping customers, and from all the evidence we can see, access to mobile money is going to continue to be a very important priority for users in this region. Stand-alone, non-MNO data services, since they lack this incentive, may have a hard time catching on despite the low initial pricing.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

To learn more about Tarifica, please visit www.tarifica.com 

Facebook CEO Visits Kenya, Generating Speculation

Mark Zuckerberg, the co-founder and CEO of U.S.-based internet giant Facebook, made a surprise visit to Kenya on September 1, giving rise to speculation that Facebook was interested in acquiring Safaricom’s mobile money platform M-Pesa. M-Pesa CEO Bob Collymore denied the rumors, saying that if Facebook wanted a mobile money service it could create its own. Zuckerberg toured iHub, the tech development center in Nairobi, and met with executives at BRCK, the Wi-Fi modem manufacturer that has been described as potential rival to Facebook’s plans to spread connectivity throughout Africa. He also met with Kenya’s cabinet secretary for ICT.   Even if the story of Facebook aiming to buy M-Pesa is, as Collymore said, a fabrication, Zuckerberg’s visit highlights the growing vitality of the tech sector in Kenya and points to the very real opportunities for outside companies to do business in this vibrant “mobile-first” region. It also suggests that lessons learned from the rapid and successful uptake of mobile money in Africa could be of interest to entrepreneurs in the developed world, as well.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  To learn more about Tarifica, please visit www.tarifica.com

Airtel Kenya Offers Discount on Bundles Purchased Via Mobile Money

Kenyan mobile operator Airtel has recently offered a five percent discount on the value of UnlimiNet bundles purchased by subscribers using their Airtel Money accounts. After selecting a preferred bundle, customers confirm the purchase by entering their Airtel Money PIN number. They will then be notified of their bundle subscription and discount allocation by an SMS from the operator. “This new offer gives Airtel Money users an opportunity to get more when they choose to purchase UnlimiNet bundles through their Airtel Money accounts,” said Airtel Kenya CEO Adil El Youssseffi.

In 2014, the Kenyan mobile money market moved KES 2.37 trillion (US $24.19 billion) in money transfers. With a population of 44.35 million people and 25.9 million mobile money customers (Kenya’s largest operator, Safaricom, has 20 million subscribers), Kenya has the largest mobile money market in East Africa and is the third-largest telecom market in Africa behind Nigeria and South Africa in terms of investment and number of subscribers. As the number of mobile subscribers continues to grow in Kenya and provide operators with a larger pool to tap into, MNOs are creating appealing data offerings as a way to increase returns on their infrastructure and technology investments. In such developing countries, subscribers’ increased demand for data offerings has been fueled by affordable smartphones (Kenya’s mobile penetration rate was 80.5 percent at the end of Q3 2014) and by specifically satisfying “unbanked” subscriber needs with mobile money offerings. Airtel’s recent discounted offer is something of a twist on the type of promotions that mobile operators are offering. Airtel is trying to incentivize customers to buy traditional mobile services through its nontraditional offering. We believe it will not only bring in revenue for Airtel through its UnlimiNet bundles but may also help the operator increase its number of mobile money subscribers in an attempt to come closer to Safaricom’s mobile money subscriber base.

Tarifica has been the leading provider of telecom pricing information for close to four decades. It maintains the most robust, in-depth and up-to-date pricing database in the industry, which includes mobile and fixed line rates from over 400 operators in 85 countries, as well as historical data going back to 1997. Tarifica also produces reports, surveys, publications and custom analyses. Its clients include operators, regulators, enterprises and consultants in every region of the globe. 

To contact an analyst at Tarifica, click here.

Mobile Money

We have written extensively in our weekly publication, The Tarifica Alert, about the explosion of mobile money services in developing economies, beginning with the launch of M-Pesa in Kenya, and about how developed economies are now playing mobile money catch-up, with ventures forming to try to incentivize the relatively affluent to use these services. The growth of the mobile money ecosystems is playing out very differently in these different economies. In developing nations, mobile money was initially introduced as a simple money transfer scheme, targeted at individuals who have no access to banks but own a mobile phone, and furthermore trust their mobile operators more than they would ever trust a bank. Using SMS, with which they are very familiar, “unbanked” individuals are able to transfer money to similarly unbanked family members, friends and businesses, many of which are used to dealing only in cash. The mobile operator charges a small fee for each transaction and holds money, or airtime, in accounts for their customers. In Kenya, less than 10 years after its launch, Safaricom’s M-Pesa service is being used by more than 70 percent of the population and has completely disrupted the financial landscape, as banks have formed partnerships with mobile operators to get into the game and offer their more traditional financial services, including credit offerings, to this newly accessible population. Leveraging the phenomenal success of M-Pesa, Seattle- and Nairobi-based software company Kopo Kopo has built a merchant platform that includes mobile payments and is now in widespread use by merchants, schools, restaurants and other entities, further changing the way business is conducted in emerging economies. A similar story is playing out in Latin American countries such as El Salvador and Honduras, as mobile operators introduce the unbanked to very basic financial services. We will likely see banks and retailers getting involved there as well, intending to capture a piece of this market by offering more traditional financial services. By contrast, in developed nations, most individuals are working with banks already, be it through checking and savings accounts or credit cards. As many of these individuals value convenience and efficiency above all, mobile payment technologies will only succeed if they can make life easier. For the less tech-savvy consumer, encouragement may initially come in the form of consortiums of MNOs and retailers offering some value-added aspect—either loyalty points, bonus, or easy payment method. We have seen this with the NFC City Berlin launch and in the U.S. with the recent roll-out of the American Express loyalty program in partnership with AT&T, Macy’s, Rite Aid and others. We also think the speed and convenience offered by mobile wallet apps like Apple Pay and Google Wallet will encourage traditional credit card users to switch to mobile phone payments. We are beginning to see combinations of players offering different payment approaches, some of which, like the Merchant Customer Exchange are trying to circumvent the 2 to 3 percent fees retailers must pay credit card companies when customers swipe their cards. We predict that these efforts will begin to shake up the strong hold credit card companies have on the retail market. At the same time, third-party apps have been seizing the opportunity to provide mobile money services to a more tech-savvy younger generation and we think these apps will change the way the younger generation views traditional checks, credit cards and savings accounts. For example, the app Venmo allows users to transfer money to friends and keep a balance in their Venmo account to cover future expenses; many users are doing just that, instead of “cashing out” and transferring the payment into their bank account. We expect to see many more mobile payment approaches that will disrupt how we use traditional financial services.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To contact an analyst at Tarifica, click here.

East African States Agree to Cut SMS Roaming Prices

Kenya, Uganda and Rwanda have agreed to reduce the cost of sending a text message across the three countries, according to a report. During a regional summit in Kigali, Rwanda, on 6 March, the three partner states agreed that the wholesale price for SMS within the region will not be more than US $0.03 per SMS, including all applicable taxes, and that the retail price will not exceed US $0.06 per SMS. This is less than half the current market rates.   While savings of US $0.03 or thereabouts may not seem very significant, such small sums can be make-or-break for consumers in developing, largely rural areas. East Africa is a "mobile-first" market, in which the entire economy is deeply dependent on mobile telecommunications, despite the fact that many users still have not been able to adopt mobile data usage. In such an environment, SMS and voice bear the preponderance of responsibility for transmitting vital business-related information, so a 50 percent reduction in SMS roaming rates should do a great deal to stimulate regional growth—not only in the telecom sector but beyond—and promote trade across the borders. Last year the three nations agreed on a reduction in roaming voice rates, under their One Network Area agreement. The current agreement on SMS extends that thinking into an area that is perhaps even more economically vital.  Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Tarifica is a division of T3i Group, a diversified telecom information provider. To learn more about Tarifica, please visit www.tarifica.com.

M-Pesa Set to Be Safaricom’s Main Source of Non-Voice Revenue

M-Pesa is the global market leader among mobile money transfer services worldwide, and it appears it will soon constitute the Kenyan operator’s primary driver of non-voice revenue, according to a study by Citigroup Global Markets. Currently M-Pesa is responsible for 18 percent of Safaricom’s revenue, compared to 8 percent from mobile data. Fifty-six percent of the operator’s subscribers are M-Pesa users.

The huge gap between M-Pesa and the competition is unlikely to be closed anytime soon, given that its revenue market share is now 85 percent. As a revenue producer for Safaricom, it is far ahead of data, which indicates that in this market, low-income users place a far greater priority on mobile money than on the types of entertainment content that drive data use in more developed markets. As a major driver of the economy in Kenya and elsewhere in sub-Saharan African, mobile money is bound to remain a key source of strength for Safaricom.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department:  http://www.tarifica.com/contactus.aspx     and        Follow Tarifica on LinkedIn

Kenyan Mobile Money Deals Reach US $24.3 Billion in August

From August 2013 to August 2014, the value of mobile money transactions in Kenya rose by 29 percent to KES 2.2 trillion (US $24.3 billion) from KES 1.7 trillion (US $18.8 billion), according to a recent report. Analysts say that growth in the industry continues to be exponential, with increased adoption of money transfer services by individuals and businesses. The service is increasingly being integrated into the different forms of financial transactions, from commercial banking to micro-insurance, local and international money transfers and bill payments. Safaricom currently dominates the mobile money market, with over 19 million customers and over 80,000 agents out of the total 124,708 representatives registered in Kenya. Lipa Na M-Pesa, Safaricom’s bill paying service, has 139,000 merchants on board, of whom 32,300 were active on a 30-day basis. Oscar Ikinu, CEO of mobile money service Tangaza Pesa, stated that many services in both the financial and non-financial sectors—for example, transport—are now increasingly relying on mobile money for execution.

We have long been chronicling the remarkable expansion of the mobile money economy in sub-Saharan Africa, and these results clearly underscore the trends we have been seeing. Kenya has been the regional leader in adoption of this service, and at this point, while the figures lend vividness to the narrative, the sheer size of the Kenyan mobile money sector comes as little or no surprise to observers. Whether or not it can be definitively established that the growth is in fact “exponential,” no one can doubt that the rate is very vigorous, and a 29 percent increase in the number of transactions in one year indicates current health and future potential.

What is more noteworthy about the present situation is the increasing involvement of the business sector. Originally, mobile money caught on in Africa due to the large number of “unbanked” potential customers, mainly private individuals and small farmers, who for the first time had the ability to make non-cash payments. Now analysts and at least one major industry player are saying that mobile money is moving into a larger sphere, in which presumably larger amounts of money will be moving than previously.

“The fact that the Kenyan business world is embracing mobile money perhaps indicates that many businesses in the country are still essentially “mom and pop” operations; however, we believe that it also indicates something more: that in a growing, “mobile-first” economy, businesses, even including the financial sector, cannot afford not to opt into the mobile money economy. If they do not participate, they will almost certainly be left out of very significant opportunities.”

John Dorfman,

Editor-in-Chief,

The Tarifica Alert

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/contactus.aspx

One Area Network Across East African Community

At a regional telecom meeting held in Kigali, Rwanda, various Ministers from four East African Community (EAC) countries—Rwanda, Kenya, Uganda and South Sudan—signed an agreement that will require operators in these countries to adopt and implement the framework for a One Area Network in the region by 31 December 2014. The launch of the One Area Network will abolish roaming charges among the four countries, and subscribers traveling there will be charged as local users on the visited country’s network. Additionally, calls that originate in any of the member countries will no longer be charged at international rates but at lower local rates. According to reports, Tanzania and Burundi did not participate in the meetings.

Before August 2012, when a US $0.22 per minute tax on all incoming calls was introduced by the Rwanda Utilities Regulatory Authority and a subsequent surge of similar taxes on international calls took place across the region, operators such as Safaricom in Kenya and MTN in Uganda and Rwanda had entered into mutual agreements that allowed their subscribers to make calls at no extra cost when traveling within the EAC. Vodacom Tanzania also had a comparable deal during that time. It mimicked the borderless network innovation that was spearheaded by Airtel’s predecessors Celtel and Zain in December 2006 across its operations in Uganda, Kenya and Tanzania. However, once taxes were levied, the cost of calling across East Africa greatly increased, with operators raising their prices to pay for operating costs and realize profits.

With One Area Network, the current trend in the EAC is to reduce the high costs of making calls across borders, which according to subscribers is higher in some cases than the cost of calls to China, the U.S. or the U.K. While we have written several times about the abolition of roaming charges in the EU, it is likely that we will begin to see roaming charges reduced or eliminated in other regions such as the EAC and Russia and its Eastern European and Central Asian neighbors. We believe that this will have a positive impact not only on subscribers but on operators, as well, since the elimination of roaming rates will most likely result in increased phone use by customers while traveling.

  In the EAC, the regional economy is also likely to benefit, because lower calling rates will result in lower operating costs for businesses, and the end of roaming should help the mobile money industry, in particular. Mobile money is very much a way of life in the EAC, and it is a steady revenue stream for operators. One Area Network is just one of the initiatives to reduce roaming and international call charges that have emerged in the Middle East and Africa since 2013. Airtel and MTN both offer “roam like home” prices to their subscribers who are traveling in countries in which they operate, and we expect to see this trend expand even further.

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

Rival Operators to Access Safaricom’s M-Pesa Sales Network

In a surprising move, Kenyan MNO Safaricom announced its decision to open up the 85,000-strong agent network of its vastly successful M-Pesa mobile money service to rival operators. This implies that sales agents will now be able to offer Airtel Money and Orange Money services alongside M-Pesa services on the same premises, which will increase the commissions available to these agents. Safaricom has stated that it removed all exclusivity provisions in its M-Pesa agent contracts in February 2014.

M-Pesa’s success is largely acknowledged as underpinning Safaricom’s dominance in the Kenyan mobile market (its share is close to 73 percent). Since its launch in 2007, the mobile money platform has grown exponentially and now has 18.1 million customers. M-Pesa’s popularity is mainly due to the vast size of its agent network. Rivals Airtel and Orange not only have smaller networks, but the growth of their mobile money services has been limited by the exclusivity provisions that prohibited M-Pesa agents from marketing other services and the fact that M-Pesa transaction fees are double for unregistered users than for registered users.  Airtel, in fact, filed a petition with the Competition Authority of Kenya (CAK) in 2012 asking it to force Safaricom to open up its network, and a decision was due by June 30, 2014. However, there has been no announcement from the CAK.

Safaricom’s tight hold on the mobile money market is becoming a matter of concern for authorities in Kenya. It has been reported that M-Pesa transactions now account for 30 to 40 percent of the Kenyan GDP. Given this fact, and given that the trend in Africa is more towards inter-operable services, it is possible that Safaricom’s decision to make its network inter-operable may be an attempt to preempt the regulator. Interestingly, a recent study also found that due to rising competition in mobile money services, Kenyan mobile money agents were the least profitable among the eight countries studied in Africa and Asia despite generating the largest number of transactions in the region. The study found that only 58 percent of the agents are expected to be in operation in a year’s time. This may also be a factor in Safaricom’s decision, since opening up its network may be better in the long run than depleting its agent network strength. The operator will still be able to earn revenues from commissions on transactions by users on rival networks and be able to reach a wider market.

Furthermore, as reported in a previous issue of The Tarifica Alert, the strategy adopted by MVNO licensee Equity Bank may also undermine Safaricom’s M-Pesa based dominance in the market. While Safaricom has challenged Equity Bank’s strategy through a complaint to the regulator, it may have seen the writing on the wall. Therefore, it may focus more on strengthening and expanding its product portfolio. For example, it has partnered with Kenya Commercial Bank to offer the Biashara Small range of financial and communication products targeting small and medium-sized businesses—a segment that Equity Bank will also be targeting.

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

Tanzanian MNOs Enable Cross- Network Mobile Money

In a joint press release, three Tanzanian MNOs announced that their mobile money services, Airtel Money, Tigo Pesa and EzyPesa (offered by Zantel), will be fully interoperable by the end of June. While there have been other examples outside the continent, notably in Sri Lanka, this announcement marks the first instance of mobile money interoperability in Africa. Hans-Holger Albrecht, president and CEO of Millicom (Tigo’s parent company), stated, “With this agreement we can help make Tanzania a global pioneer in digital financial inclusion. Interoperability will be a catalyst for growth in the mobile money sector and is long overdue.” Helping to facilitate the agreement were the Bank of Tanzania, the Bill and Melinda Gates Foundation and the International Finance Corporation (an arm of the World Bank). Notably absent from the deal was Vodafone’s Tanzanian subsidiary Vodacom. Regarding this absence, Diego Gutierrez, general manager for Tigo Tanzania, stated, “There has been a commitment at group level including Vodafone to pursue interoperability.” He continued, “The conversations with Airtel and Zantel have moved quite fast but I think eventually everyone is going to be integrated.”

The willingness of three MNOs to come together and make a deal on mobile money is likely driven, in part, by their observations of the mobile market in Kenya, Tanzania’s neighbor to the north. There, Safaricom Kenya (in which Vodafone owns a 40 percent stake, making Vodacom’s absence from the initial deal in Tanzania probably not coincidental) has achieved a dominant position in the mobile money marketplace. Safaricom’s M-Pesa system is used in 98 percent of mobile money transactions in Kenya, with nearly a third of the nation’s total GDP flowing through it. The system is used for school fees, utility bills, money transfers and sometimes even to pay salaries. The near-universal acceptance of M-Pesa has prevented other mobile money platforms from gaining traction, and Safaricom has leveraged this position to expand its market share for more traditional mobile services.

Clearly, Tanzanian operators have every incentive to prevent this situation from being replicated in their country, and we believe that this program is a strong move toward that goal. The success of mobile money is predominantly driven by two factors—ease of use and the number of businesses and individuals that accept it as a viable cash alternative. While this program removes the possibility that any of these operators will be able to achieve the degree of dominance (and all the associated benefits) that Safaricom has in Kenya, it will likely expand the reach of mobile money in Tanzania, thereby increasing revenues for all stakeholders.

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

Kenya’s Largest Financial Institution to Provide MVNO Service

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