Cellphones look set to take over from our wallets as developments in Africa take cellphone banking to a whole new level. Airtime is becoming a currency and technology is allowing money transfers to be paid by SMS.
Got Prepaid, a subsidiary of Venture Group, has created a local payment process that sells airtime directly to consumers via their cellphones without using a voucher. The concept, which has been around for a while, has been taken a step further in allowing budding entrepreneurs to become vendors of airtime. Using a special device, a vendor can stand at a taxi rank, for example, and sell R10 of airtime to passing trade. He makes a commission from the sale and the customers have the benefit of convenience.
Large corporations are also using the system to offer discounted airtime to employees as a perk. By purchasing in bulk, they are able to provide the airtime to the employees, who could draw on the discounted airtime as needed during the month and have their airtime purchases debited against their salary at the end of the month.
In markets like Nigeria, where Venture Group already operates, it is estimated that up to two-thirds of all airtime distribution is done via handset, not till point. “There are also several thousand merchants being served by Venture subsidiaries in countries like Mozambique and Namibia,” says Venture Group chief executive Richard Smuts Steyn.
In Kenya, Vodafone (which has a 35% stake in Kenya’s Safaricom network) has developed an SMS-based payment system that allows money transfers by cellphone. Known as M-Pesa, or mobile money, the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector.
Apart from transferring cash, customers of the Safaricom network will be able to keep up to 50Â 000 shillings in a “virtual account” on their handsets.
There is no need for a new handset or SIM card. To send money you hand over the cash to a registered agent — typically a retailer — who credits your virtual account.
You then send between 100 shillings and 35Â 000 shillings via text message to the desired recipient, who cashes it at an agent by entering a secret code and showing ID. A commission is paid by the recipient but it compares favourably with fees levied by the major banks.
Cellphone growth in Kenya, as in most of Africa, has been remarkable, even among the rural poor. In June 1999, Kenya had 15Â 000 mobile subscribers. Today it has nearly eight million out of a population of 35-million, and the two operators’ networks are as extensive as access to banks is limited.
A report by Consultative Group to Assist the Poor, a division of the United Nations Foundation, based on a survey conducted in South Africa, shows that low-income earners are keen to adopt technology and see it as the way of the future. The report concludes that cellphone banking was a very viable way to meet the financial services needs of low-income earners in developing countries.