News
Mobile payments service to be withdrawn from SA market on 30th June.
Vodacom said the strong banking sector in South Africa meant that it was no longer feasible to continue marketing M-Pesa mobile money services in this market, although it stressed that other M-Pesa markets would not be affected.
The Vodafone-owned company said on Monday that it will discontinue its M-Pesa product in South Africa with effect from 30th June 2016. The move means that M-Pesa will now be available in 10 markets rather than 11.
Vodafone said in April that the M-Pesa mobile money increased its user base by 27.1% to 25.3 million active customers in the 12 months to 31 March, driven by launches in Albania and Ghana.
According to Vodacom CEO Shameel Joosub, the company decided to drop the service in South Africa because “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 South Africa there is little prospect of the M-Pesa product achieving this in its current format in the mid-term," Joosub said.
Vodacom said M-Pesa services would continue to be offered in other markets where financial inclusion is limited and where there is a more supportive macro environment.
"Kenya and Tanzania are prime examples of this. It is important to note that this decision does not affect [Vodacom’s] M-Pesa customers in Tanzania, Lesotho, Mozambique and the DRC, where the product continues to grow exponentially," the company said.
Vodafone’s Safaricom unit first launched the M-Pesa service in Kenya in 2007. Vodafone units also provide M-Pesa in India, Egypt, Ghana, Romania and Albania.
In 2015, Vodafone partnered with South Africa-based MTN to enable M-Pesa users and MTN Mobile Money users to transfer funds between each other. This formed part of growing efforts by the company to ensure that M-Pesa would be interoperable with other mobile money services.
With regard to customers, Joosub said: “Vodacom is fully committed to mitigating any inconvenience to customers impacted 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.”
