Phone
“To be able to send money standing here, so that my sick mother can get medicine, is one of the best things to happen in my life,” said the 45-year-old who sells newspapers off a folding table in Kenyas capital, and has no bank account.
Phone companies are making a beeline for emerging markets to win mobile-money business from the likes of Muriithi, who uses the M-PESA service from Safaricom Ltd., 40 percent owned by Vodafone Group Plc. Operators such as Vodafone and MTN Group Ltd., Africas largest wireless company, are targeting about 1.7 billion people with no access to banks. Mobile-money in emerging markets could ring in $7.9 billion of sales for operators by 2012, says GSM Association, an industry group in London.
“Its hard to ignore the impact and potential of mobile as a conduit for developing financial services,” said Mark Beccue, an industry analyst at New York-based ABI Research. “It makes perfect sense to marry the two together.”
This is how it works: Customers store money on handsets by opening an account with the operator. They can then send cash through text messages to recipients, who collect it from the operators local agent. In villages, the agents could be at the hamlets grocer, gas station or post office.
Growth Potential
Mobile money is attracting global names, including Vodafone, France Telecom SA and Nokia Oyj. Some have announced partnerships with financial-services companies, including Visa Inc., Citigroup Inc. and Western Union Co. The European operators interest coincides with a push into emerging markets as demand slows at home, where there are more wireless connections than people.
“Operators are looking at emerging markets because penetration is lower and theyre still growing,” said Joris Franssen, who helps manage about 400 million euros ($564 million) at Kempen Capital Management in Amsterdam, including France Telecom and Vodafone stock. “If you want to do it well, you should offer functionalities that are desired over there. Mobile money could be one of them.”
The business is currently a miniscule portion of the mobile- phone industry. Still, the GSMA, which hosted a conference on mobile money in Barcelona last month, says sheer volumes will drive the business.
More Mobile Phones
It estimates that by 2012 about 364 million handset owners without bank accounts will sign up for services that allow money transfers and payment of bills. Mobile moneys reach will increase as it becomes available in more countries and customers get more familiar with it, the group predicts.
Zain, the Kuwait-based operator whose Zap offering competes with M-PESA, plans to expand that service to 22 markets from three. South Africas MTN started MTN MobileMoney in Uganda in March and announced “a series of planned launches” across Africa and the Middle East. Orascom Telecom Holding SAE, the Middle Easts biggest mobile-phone company, this month began money services in Pakistan with Citigroups Citibank unit.
For the Future
M-PESAs registered users almost tripled to 6.2 million at the end of March from a year earlier. The business, which started in 2007, accounted for about 4 percent of Nairobi-based Safaricoms 70.5 billion shillings ($920 million) in sales in the year ended March. That may rise to 6 percent this fiscal year, Michael Joseph, East Africas biggest mobile-phone companys chief executive officer, said in an e-mail on July 3.
Newbury, England-based Vodafone, the worlds largest wireless operator, also offers money-transfer services through majority-owned Vodacom Group Ltd. in Tanzania and a partnership with Roshan in Afghanistan, said spokeswoman Caroline Dewing.
France Telecom and BNP Paribas SA announced the start of their Orange Money service in the Ivory Coast in December. Nokia this year bought a stake in Redwood City, California-based Obopay, which started a mobile-money service in India last year.
“Investing in something like Obopay is about building business for the future,” said Mark Durrant, a spokesman for Espoo, Finland-based Nokia. “Mobile payment is a topic that many people are interested in.”
Infrastructure Linked
Mobile money in Europe and the U.S. predominantly involves using text messages to pay for ring tones and music downloads and bank customers operating accounts from their mobile phones, said Junipers Wilcox. It may get a boost in the third quarter when Nokia starts selling its 6216 classic phone, which allows for a wider range of electronic payments, he said.