W
ouldn’t it be great if you could do away with your wallet and carry just a phone? Now, thanks to the arrival in South Africa of “digital wallet” services like M-Pesa from Vodacom and WeChat Wallet, that may just be possible.
Like a physical wallet, a digital wallet lets you make instant payments – but only to selected retailers at present – and dish out ‘cash’ to friends and family, so long as they’re also on the same digital wallet service.
M-Pesa is an African success story, Launched in Kenya in 2007 by Vodacom sister company Safaricom, M-Pesa is now used by millions of people in markets across Africa for mobile banking and money transfer services. More than 70 percent of the adult population in Kenya uses it, while in Tanzania, more than half of Vodacom’s customers use it.
But its reception by South African consumers has, until recently, been underwhelming, despite two separate local launches, the first in 2010 and the second in July last year.
The network’s KwaZulu-Natal honcho Steven Barnwell believes this is changing. He says there are 1.6 million users in South Africa, 200 000 in KZN. While this is far short of Vodacom’s five-year goal of 10 million users, he believes sign-ups are approaching a tipping point. “We’re expecting exponential growth in the coming months,” he told me recently. He credits a combination of factors for this bullish outlook.
One is the lure of free and steeply discounted airtime and data for M-Pesa users. Another is the ability to pay for prepaid electricity using M-Pesa, something that up till now has required either a bank account or cash.
A big attraction of M-Pesa is that transactions are free, compared with some banks that charge as much as R10 per transaction. It’s also a lot more secure than having to carry cash around. With the recent launch of a M-Pesa Visa card, customers will be able to enjoy the benefits of a credit card without having to jump through as many hurdles as they’d face doing it the old fashioned way.
And with more and more retailers signing up as merchants, M-Pesa account holders will soon have a lot more places at which to spend their mobile money. Advantages and, in my opinion a few extra, apply to the more recently launched WeChat Wallet. It may be a newcomer to South Africa, but it’s been a huge hit in China and other Asian countries for years, thanks to the popularity of the WeChat instant messaging platform.
In South Africa, it’s backed by media and banking heavyweights Naspers and Standard Bank respectively.
One of the things I like about it is that you can link up to three chip and PIN debit or credit cards – verified by Visa and MasterCard security systems – to your WeChat Wallet. Cards can be used to “cash in” (WeChat speak for deposit), pay for services such as airtime, electricity, food, or pay SnapScan merchants.
In addition, cash can be sent to friends via WeChat – without the need for a bank account. When registering for WeChat Wallet, people automatically become Instant Money users, which allows those without bank accounts to enjoy the benefits of the platform.
This is a great option for parents of teens who want a place to deposit their pocket money, although Fica rules mean the child will need to be over 16 and have a valid ID document.
You can “cash in” and “cash out” at Standard Bank ATMs and participating retailers, including SPAR, SPAR Tops and Cambridge Food Stores.
Brett Loubser, the head of WeChat Africa, believes the service will strike a chord with tech-savvy types looking to merge the online and offline worlds.
“Now they won’t be inconvenienced if they forget their purses or money at home because everything they need is at their fingertips,” he said at the recent launch in Joburg.
“You no longer have to worry about sending money to a friend or family member that doesn’t have a bank account or that doesn’t bank at the same bank you do. With WeChat’s Wallet, you can transfer money directly to their phone and they can cash the exact amount they need and keep the balance for later.”
I haven’t had a chance to try out M-Pesa, but I have used WeChat Wallet and it’s pretty easy. Registration is as simple as downloading the WeChat App from the appropriate store and following the instructions. Then tap ‘Wallet’ and follow the step-by-step instructions.
Fica verification, normally standing in a long bank queue clutching a sheaf of documents, was a snap – you simply take a picture of your ID document.
Loading existing bank cards is a synch and I was up and running within half an hour of downloading the app.
Much as digital wallets appeal to my geeky side, I won’t be ditching my old school leather wallet soon. For one thing, M-Pesa and WeChat Wallet are limited to a small number of retail outlets, something I predict will change rapidly over the coming few months.
For more information about M-Pesa go to Vodacom.co.za and type M-Pesa into the search field. Download WeChat free from iTunes or the Play Store.
–Follow Alan Cooper on Twitter @alanqcooper.