The 12 million users of mobile social networking service Mxit could save up to R5 billion per year in transaction and telecommunications fees if the joint service between it and Standard Bank pans out.
The tie-up is to be announced this weekend at the World GSM conference, in Barcelona, Spain.
Lindsey Mc Donald, an analyst at consultancy Frost & Sullivan, says this is an early and progressive form of monetising social networks.
“Social networking services are turning into more than just places where people hook up with their friends and family; they are going to be the launch pads for commercial ventures. The fact that Mxit and Standard Bank have linked up to launch this service is surprising, as it shows they are very progressive in their thinking,” she says.
According to Mxit founder and CEO Herman Heunis, the tie up will make it easier for Mxit users to buy the social networking service's money credits, called Moola, by using the bank's MiMoney payment solution.
The mechanics
When a MiMoney voucher is purchased through a self-banking channel, consumers will be asked to provide their cellphone numbers in the beneficiary reference field. Once that transaction has been completed, an 18-digit voucher number is delivered to the specified cellphone number.
When a MiMoney voucher is bought from a “real world” sales agent (Ster-Kinekor was the first sales agent to sell vouchers), the 18-digit number has to be SMSed to the number provided on the sales slip, which will activate the voucher. This can then be used at any online retailer/service (like Mxit) that indicates acceptance of this payment method.
The MiMoney client saves on transaction fees as the merchant carries this cost. The MiMoney vouchers are available in any denomination for amounts of up to R1 000 and the monthly limit is R10 000.
Big plans
Mc Donald says the rise of virtual money, which this concept technically is, is hinged on lowering the costs for the consumer.
“If it is going to work, it must make it cheaper for people to transact and it is also more secure than carrying cash,” she notes.
Heunis says: “Our quest, since launching Mxit in May 2005, has been to collaborate with strategic business players in various sectors, especially the banking sector, to ensure we meet the needs of our target market.”
Mxit users will be able to purchase Mxit Moola at a significantly reduced cost compared to the current premium-rated SMS mechanism once the system goes live in April.
“A large segment of our user base is entry-level and unbanked,” comments Heunis. “They do not have bank accounts, but they do have mobile phones, and with MiMoney they can purchase goods and services with their mobile phones without using hard cash. Mxit will start hosting various shop fronts on the Mxit platform, which will enable users to purchase items such as airtime, music and Mxit Moola.
“If you look at the prediction for Internet access via the mobile phone for Africa and the Middle East, some analysts expect an increase of 400%-plus within five years,” he says.
Mxit plans to expand the offering into 26 countries, many of these on the African continent. “The expansion into Africa is intended to grow the user base on the continent substantially. We invite mobile operators in the various African countries to collaborate with it in creating new revenue streams for all parties.”
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