Vodafone extended the M-Pesa mobile money transfer and payments service to the international payments market, launching its first international money transfer corridor between Tanzania and Kenya.
The move means that M-Pesa customers from East Africa's two biggest economies can now use their mobile phones for secure money transfers between the two countries via an established, combined network of 180,000 agents.
Michael Joseph, Vodafone director of mobile money, said: "With a substantial unbanked population transacting mainly in cash, the Tanzania-Kenya corridor represents a significant opportunity for M-Pesa to give people and companies an accessible, low-cost alternative to traditional international remittances."
Formal remittances between Tanzania and Kenya were around $133 million (€122 million) in 2012, according to the World Bank. Vodafone also noted that the cost of transferring money internationally through traditional channels like banks or money transfer operators can be up to 31 per cent of the transaction, depending on the service provider. By comparison, using M-Pesa to transfer $50 across the Tanzania-Kenya border would cost around 1 per cent of the transaction plus a foreign exchange fee, the company said.
Vodafone's M-Pesa service was first launched by Safaricom in Kenya in 2007 and is now available in Tanzania, Fiji, South Africa, DRC, India, Mozambique, Egypt and Lesotho. Romania became the first European market to gain access to the service in March 2014.
M-Pesa works by allowing people to send money electronically through a network of agents, such as mobile phone stores and retailers, and using SMS and a PIN code to confirm payment.
Orange also provides a money transfer service called Orange Money, and recently reached an agreement with pan-African bank Ecobank that allows Orange Money subscribers who also have bank accounts with Ecobank to transfer money between their respective accounts. The service has so far been launched in Mali and will be rolled out in other African companies in the first half of 2015.
Such services form part of efforts to drive "financial inclusion" by using mobile phones as a means of providing basic banking and payments services to the "unbanked". Globally, an estimated 2.5 billion people do not have a bank account.
The GSMA recently published its fourth annual Mobile Financial Services State of the Industry Report, which said the number of active mobile money customers increased by more than 40 per cent in 2014 to 100 million people. With 255 services in 89 countries, mobile money is now available in 61 per cent of developing markets. Mobile network operators have taken the lead in 149 of these services.
In Sub-Saharan Africa, the birthplace of mobile money, over 50 per cent of all MNOs have already launched a mobile money service and by December 2014, 23 per cent of all mobile connections there were linked with a mobile money account, the report added.
Analysys Mason said in October last year that the number of mobile money wallets had surpassed that of bank accounts in major East African markets including Kenya, Tanzania and Uganda.
However, in 2014 half of all new mobile money launches took place outside of the Sub-Saharan Africa region, the GSMA said. For instance, in Latin America and the Caribbean, the number of active accounts increased by 50 per cent over the year.
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