Vouchers beat wallets to mobile money

Money is no longer changing hands in the form of mobile wallets, but instead is taking the form of vouchers with a random set of numbers, making them as ‚unguessable‚ as possible, says HERMAN SINGH of Beyond Payments.

Money changing has a new face and it’s not conveyed in the glitzy world of mobile wallets, or in bright and shiny apps. Rather it’s in trusty vouchers, with their cryptographic random ciphers (the sets of very long ‚random‚ numbers that are designed to be as “unguessable”” as possible).

This is the view of Herman Singh, CEO of Beyond Payments, the payment innovation arm of Standard Bank.

‚A quiet banking and retail revolution is taking place in many locations from bank branches and ATMs to spaza shops and large retail chains in South Africa,‚ he said, adding that this revolution is essentially embodied in prepaid vouchers, which are issued by banks.

‚The prepaid phenomenon has seen soaring uptake particularly in countries where customers are credit- rather than debit challenged, as our lower income communities are.

For example, over R100 billion is generated in sales of prepaid airtime and electricity annually, while over 2.5 million money vouchers valued at over R450 each, are created and redeemed every month in South Africa. That’s over R1 billion a month!

What’s more, over a billion rands worth of e-currency is switched by Standard Bank’s ecurrency switches every month, powering millions of clients a year,‚ he said.

According to Singh, the explosive growth in money vouchers, which make up about a sixth of the traditional prepaid voucher business,has killed the mobile wallet as a viable payment instrument. This is due to their being simple to use, and the fact that they have real monetary value and are approved by the South African Reserve Bank.

‚For example, Standard Bank’s INSTANT MONEY that will be the fastest voucher to grow to R1 billion in the history of commerce with 12 000 points of availability. This is soon to increase to over 20 000 as the solution extends to other channels such as ATM’s and point of sale machines,‚ he said.

‚While Africa has seen hundreds of billions of dollars in vouchers of all types being issued, it is the prepaid money voucher itself that is revolutionizing the world of banking and retail,‚ he added.

How was this achieved?

‚By creating a slick and painless way for individuals to load and move funds using their phones without the need for a wallet,‚ says Singh, adding that unlike countries such as Kenya and Uganda where wallets have been widely adopted, this is not the case in South Africa.

‚Lower income segments in this country are asking for less ‚Banking Bling‚ and more utility and value based offerings. These solutions must be extremely simple to use and available almost everywhere at extremely low costs. This explains the boom in prepaid money voucher sales,‚ he said.

Singh sites that of the close to 20 wallets that were launched in the last four years in South Africa, only a handful remain, struggling to survive within a niche market or trapped in small closed loop systems, which are usable only by a single banks’ clients on their own ATM’s.

‚It’s open systems that will win. Consumers want freedom of choice, not freedom from choice,‚ he said.

mPesa, a mobile wallet launched in Kenya generated revenues of R700-million in the last fiscal year, while inthe same market with vouchers in South Africa, generated R400-million in revenues. Here is that catch though ‚ in Kenya the revenue was earned by the telecommunications sector, while in South Africa it is being earned jointly by retailers and banks. (please explain then the relationship between Vodacom and Nedbank in mPesa SA.)

‚The launch of mPesa in South Africa has seen slower uptake and I contend that a major cause is the prevalence of alternative voucher based solutions in RSA,‚ Singh said.

Singh believes that the powerful partnership between banks and retailers in South Africa will see the local mobile money market exceed that of Kenya with almost three times as many service points.

‚This is all due to simple customer centric solutions that are cash based, simple and intuitive to use, available at thousands of retail points to the unbanked and located where clients actually live and work,‚ he said.

“”This subtle and ‚under the radar’ sea change is missed by analysts who measure wallets instead of vouchers, apps instead of bank shops, smartphones instead of cash money sends, ATMs, instead of branchises and complexity instead of simplicity,‚ he added.

The true innovation champions in Africa are those deploying less features and more value, less Western fad elegant obsolescence and more basic down to earth home grown African ingenuity,‚ he concluded.

A silent revolution that demonstrates once again that the Bling may not win!

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