Vodacom to stop selling M-Pesa mobile payments service in South Africa

Vodacom, the South Africa-based mobile operations of the Vodafone Group, said it has decided to stop selling mobile money services under the M-Pesa brand in South Africa with effect from Jun. 30, 2016.

The announcement comes only a few weeks after Vodafone said total M-Pesa users had exceeded 25 million in 11 countries by the end of March, and marks an unusual set-back for a service that has generally been regarded as a huge success.

Vodacom CEO Shameel Joosub explained the decision by saying that the operator no longer expects the service to reach the requisite number of users because South Africa already has a well-developed banking sector.

"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 stressed that M-Pesa services would still be available 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. M-Pesa is also provided in India, Egypt, Ghana, Romania and Albania.

In April, Vodafone group director of mobile money, Michael Joseph, said M-Pesa had grown beyond its original remit of providing simple money transfer services to consumers.

"Since 2007, M-Pesa has enhanced the lives and livelihoods of people without bank accounts, giving them access to essential financial services through their mobile phones," Joseph said.

M-Pesa is now the largest mobile payments platform in emerging markets, the Financial Times reported at the time. Joseph told the newspaper that Vodafone is discussing expanding the service into additional markets through partnerships with other operators, building on its existing deals with 37 partner companies in 57 countries.

For more:
- see the Vodacom release

Related articles:
Vodafone increases M-Pesa users by 27% to 25M in year to end-March
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Ericsson: Majority of Sub-Saharan mobile financial services accessed via agents, not phone
GSMA: Global mobile money account registrations grew by almost 100M in 2015
Vodafone reveals strong growth in M-Pesa transactions as it launches service in Ghana

 

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