Vodacom has today Monday, announced its decision to discontinue its M-Pesa mobile payment offering in SA by the end of June.
The mobile network Vodacom South Africa went back to the drawing board a few months ago to consider various options for its sluggish mobile money transfer service M-Pesa, and has finally resolved to terminate the offer by the end of next month.
“Vodacom’s decision is based on the fact that the business sustainability of M-Pesa is predicated on achieving a critical mass of users. Based on our revised projections and high levels of financial inclusion in SA, there is little prospect of the M-Pesa product achieving this in its current format in the mid-term,” CEO Shameel Joosub said in the statement.
M-Pesa was launched in 2010 to enable customers – particularly unbanked users – to transfer money from person-to-person using mobile phone and text-messaging technology. While launching it, the company set a target of reaching 10 million local users but it is obvious they couldn’t reach the target number of users they wanted.
Vodacom then relaunched the service in August 2014 in a bid to spur interest in the product. The mobile payment offering relaunched in 2014 further involved a simplified registration and FICA process; and the establishment of 8 800 points of presence.
The company’s 2015 integrated report revealed that while one million people registered for M-Pesa in South Africa, only 76 000 people were actively using the service. The report further stated that “progress has been slower than we’d like” regarding the mobile payment offering.
However, the company’s CEO Joosub pointed out that the company’s new decision is only applicable to south Africa alone as other countries will still enjoy the M-Pesa benefits
“In other markets where financial inclusion is limited and where there is a more supportive macro environment, M-Pesa continues to gain solid traction based on exponential growth in customer acquisition. Kenya and Tanzania are prime examples of this. It is important to note that this decision does not affect M-Pesa customers in Tanzania, Lesotho, Mozambique and the DRC (Democratic Republic of Congo), where the product continues to grow exponentially,” the statement said.
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Meanwhile, with regard to customers, Joosub says: “Vodacom is fully committed to mitigating any inconvenience to customers affected by the decision and assures all M-Pesa South Africa customers that their funds remain safe and readily accessible. We remain of the opinion that opportunities exist in the Financial Services environment and we will continue to explore these.”