The MTN Mobile Money (MoMo) platform is closing in on a total of just over two million users since its relaunch in February.
So says Felix Kamenga, MTN SA chief officer for mobile financial services, in an e-mail interview with ITWeb.
Kamenga notes MTN has identified fintech as a key growth pillar and, as such, is committed to funding MoMo over the next few years.
“The investment in both capex and opex is several hundred million rands. Beyond just the finances, mobile money operations by their very nature with their focus on the unbanked and informal network require significant manpower,” he says.
“The investment in people has resulted in over 700 new jobs being created, predominantly for the youth, with more expected after the COVID-19 pandemic.
“Our target for 2020 was to achieve one million users and we surpassed the number within six months. Our current focus is to ensure we retain our existing customers and recruit more customers by introducing more innovative features into MoMo,” says Kamenga.
MTN relaunched its MoMo platform in Johannesburg, about four years after the service failed to take off in SA.
In September 2016, MTN SA announced it was decommissioning the MoMo offering in the country due to lack of commercial viability.
The service was originally launched in 2012, when MTN partnered with the South African Bank of Athens, Pick n Pay and Boxer stores to offer a mobile money solution enabling the opening of simple bank accounts via phones.
The telco then relaunched the service in partnership with Ubank, a financial service provider with a strong presence in rural areas as well as mining communities in SA.
Speaking during the relaunch event, MTN SA CEO Godfrey Motsa said he was “stubbornly optimistic” the mobile operator’s mobile money service will be a success in its second attempt.
More than money
According to Kamenga, key success factors of mobile wallets are distribution networks and building an ecosystem around the product to encourage usage and transactions.
“These are the areas where the previous deployment was lacking. The new MTN Mobile Money service comes with new innovative features that cater to the current economic landscape and consumer behaviour.
“Previously, we relied on USSD functionality. The current MoMo has both USSD and app functionality, and uses the latest technology in facial recognition and voice biometrics to secure your account.”
He notes the platform is built to easily integrate with other third-party services providers and create an ecosystem of services and not just a store of value.
These integrations work via open application programming interfaces, which means developers and other entrepreneurs can easily use MoMo as a payment collection or cash disbursement solution at a cost that is lower than the industry benchmark, he adds.
Kamenga points out the biggest uptake has been in airtime and bundle purchases for MTN and other networks because MoMo is network-agnostic.
“However, we’ve seen high uptake on basic services such as bill payments, especially DStv, and since COVID-19, we have seen a huge increase in car licence renewals and Lotto payments.”
Mobile money offerings have been successful all over the continent but do not have a strong track record locally.
In May 2016, like MTN, rival Vodacom also pulled the plug on its offering, M-Pesa, in South Africa.
Although there have been challenges, Kamenga says MTN SA has leveraged these learnings, especially in the areas of distribution, to grow an ecosystem that drives transactions.
He says although SA is highly banked, with over 80% banking penetration, various studies have shown that most South Africans withdraw their whole salaries and welfare grants.
“There is limited usage of formal products simply because they do not meet the needs of the consumer, either in their utility, features or costs. It is then prime for disruption by new entrants, innovation and disruption in product design and distribution networks and customer engagement.
“The cost of accessing the formal banking infrastructure and products, even for low-cost accounts, is high, primarily driven by transport costs to reach towns and cities where there are bank branches, ATMs and retail chains. These are the issues that MTN SA has taken into consideration when building the new Mobile Money service,” Kamenga notes.
Some market watchers have noted MTN’s MoMo will find it difficult to scale because of services like eWallet which are already popular with users.
However, Kamenga says MoMo does not compete directly with eWallet; “instead it offers a far more integrated solution for customers”.
He points out MoMo is an ecosystem that offers multiple services on a single platform. “Most services [eWallet] have not addressed the needs of the unbanked in a holistic fashion, which has resulted in fragmented offerings, most linked to formal banking.
“MoMo not only offers multiple services from remittances to bill payments but also multiple ways to get money in and out of the system.”
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