Mobile Phones Turn Into Bank Accounts In Africa

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Mobile Phones Turn Into Bank Accounts In Africa

As shocking as it may sound, mobile phones are far more common in Africa than bank accounts or other financial services. In an attempt to make banking services more accessible, MTN, the South African mobile operator is launching a banking service for its customers.

This service will be available in 21 countries and will let users perform basic banking operations such as money transfers, through their mobile phones.

MTN money Transfer, which has just been launched in Uganda, is the first such service there. Initially the service will be very simple, but later on it may be upgraded depending on the market needs.

Head of MTN’s mobile money development, Dare Okoudjou, said, “a lot of people do not have formal access and financial services, whereas they do have a mobile telephone or are living with someone who does have access to a mobile handset.”

MTN has signed a $9.7 million deal with South African mobile payment firm Fundamo, to set up these services. This service will enable people to move real money between the mobile accounts through their handsets. Users who enroll for the service will have an account created for them, through which they can carry out basic financial transactions. The account will be set up for free, but each transaction will be charged at a nominal rate.

Four other similar schemes have already been launched elsewhere in Africa, one of which is backed by The Bill And Melinda Gates Foundation. They are investing $12.5 million in this service.

In February 2009, Monitise set up a service with E-Fulusi Africa to set up a mobile banking system in East Africa.

Standard Chartered and Citibank are also setting up a service called Zap, which will be accessible to more than a 100 million Africans.

Earlier this month, Mi-Pay and Isys started a scheme in Sudan, which will be a sort of testing ground for person to person banking, in that region and may be extended to 22 nations in Africa and the Middle East.

The first such scheme M-Pesa system Kenya is making banks compete with mobile operators, and has garnered over 4 million subscribers since its inception in March 2007.

The mobile operators certainly expect to lure more customers to themselves, through such schemes.