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Mobile money to be the killer app

Week 28, 2009

Besides allowing end users to transfer money inland or for international remittances, the handset turns into a secure means to carry money around, especially in countries where carrying cash is insecure. Mobile Money services provide an easy and safe way to move money around.

Thanks to this ease of use and security, Mobile Money users are very loyal customers. When users not only handle their communications, but also their relationship to money through their handset, they become very reluctant to switch providers. Besides the financial income, Mobile Money is the definitive solution against churn for mobile network operators.

For instance, Zain, the multinational operator headquartered in Kuwait, and with operations across 24 countries in the Middle East and Africa, claimed to have 65 million customers, as of March 31, 2009, and has established a global network by abolishing roaming charges between the countries where it operates. Now, Zain has launched Zap, a service that allows customers to pay bills such as electricity, and can even be used to settle grocery bills in the supermarket. Zap allows to interact with select bank accounts, top-up or transfer airtime, and move money to businesses, friends and family. The specificity of Zap is that it charges a flat fee, for instance UGX 250 (EUR 0.09) in Uganda, or KES 10 (EUR 0.10) in Kenya, per transaction rather than a percentage of the transaction. This aggressive pricing policy is the best way to attract and keep customers loyal to the mobile network operator. Zain has announced it expects to almost double its customer base to reach 110 million by 2011 (cf. Smart Insights #09-27).

Besides Zain, many Mobile Money projects are happening in Africa and more globally in emerging countries: M-PESA is successfully run by Safaricom in Kenya since March 2007 (cf. SI #07-11), MTN is launching Mobile Money in Uganda (cf. Convergence section), …

Mobile communication technology is developing successfully along lines that were never anticipated when the technology was invented, standardized, planned and launched. The SIM card industry is and remains an essential part of this expansion.

Thierry Spanjaard

Chief Editor

Smart Insights