Why A Revamped M-Pesa Will Work In South Africa This Time Around

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Written by Kevin Mwanza

From How We Made It In Africa

It is frequently noted that business models that work in the US or European countries, might not work in Africa and should be adapted to the continent’s specific needs. The same can be said for adapting business models from one African country to another, as the ‘copy-and-paste’ method does not address different market dynamics. And there is no better example of this than the case of M-Pesa.

Herman Singh, who heads Vodacom’s m-commerce division, explains why he thinks the revamped M-Pesa will work in South Africa this time round.

Mobile payments and banking service M-Pesa was launched in Kenya in 2007 by Vodafone and has been a massive success with over 70% of the adult population using the service today. It’s uptake in the Tanzanian market has also been strong.

A major part of M-Pesa’s success has been in addressing the needs of the unbanked population who simply need a mobile phone to use the service. Mobile phone users can transfer cash amounts between each other, store money in a digital wallet, pay for goods at retail points of sale, and withdraw and deposit from street vendors and store agents.

But the model that has been so successful in Kenya and Tanzania, proved to be a failure in South Africa when launched in 2010, with the service later being suspended. However, M-Pesa has recently been relaunched, this time with a new model said to better address customer needs and behaviours in South Africa.

According to Herman Singh, Vodacom’s managing executive for m-commerce who was appointed to guide M-Pesa’s relaunch in the market, the platform has been completely revised.

“We recognise that Kenya’s and South Africa’s demographic profile is totally different so we had to do something fundamentally different… We have rebuilt the platform and the way the system works from scratch. The product features are all very different, and they had to be because the countries are different.”

While the platform has around 600,000 customers in South Africa right now, Singh said he predicts huge growth in the service. But what did Vodacom initially get wrong with M-Pesa in South Africa, and how does the revamped service differ from the Kenyan model?

Read more at How We Made It In Africa