The rollout of the mobile money transfer service by Safaricom comes less than two months after MTN and Western Union partnered to introduce international remittance services in 21 countries where MTN has a presence. Meanwhile, the Zap service - formerly run by Zain and now operated by Bharti Airtel - has also been expanding steadily over the past year. MTN's mobile money transfer already boasts over 1 million registered customers in Uganda alone.
The rollout of the service by operators is threatening the continued existence of traditional money transfer services. Most Africans are now using mobile financial services to buy goods, pay utility bills, buy mobile airtime as well as receive funds from abroad.
The M-PESA service is currently available in Africa and the Middle East including South Africa, Kenya, Tanzania and Afghanistan and is currently being piloted in India. The service will allow users to send and receive money across the continent using a mobile phone. Safaricom is in partnership with Vodafone of UK for the provision of mobile commerce services in the region. Plans are under way by the companies to expand the service to the Democratic Republic of Congo, Mozambique and Lesotho.
Former Safaricom CEO Michael Joseph who chairs the board of directors of both Safaricom and Vodacom is expected to lead the expansion of the M-PESA service across Africa. Vodafone owns 65 percent stake in Vodacom Group, based in South Africa. Joseph was instrumental in making M-PESA a success when he was at the helm of Safaricom and is expected to drive the regional expansion program. The M-PESA mobile commerce was launched by Safaricom in 2007 and has since been expanding, with more than 13 million subscribers at this point.
Last year, Zain Africa - now Bharti Airtel - expanded the Zap mobile money commerce to Malawi, Nigeria and Sierra Leon after a successful rollout of the service in Kenya, Uganda and Tanzania and claimed 10 million people subscribe to the service.
"I used to travel to the village to pay my workers. But now I send the money through a phone because there are centers nearby where my workers collect money," said Lawrence Banda, a mobile commerce user in Zambia.
Zap is part of Airtel's One Network Platform, which allows subscribers to call countries where the service is available without paying roaming charges. The platform also allows travelling customers to make calls and SMS messages at local rates as well as recharge their mobile phones will locally purchased top-up cards. Using the platform, travelling customers are also able to send money back to their families and business from those countries where the Zap service is enabled.
Generally, most Africans do not have banks accounts and customers typically have to travel long distances to access traditional bank facilities. As a result, Africa is experiencing an explosion in mobile money transfer services as banks and mobile providers compete for customers who would otherwise not have a bank account.