MTN SA recently became the first nonbanking company to join the PayShap digital payments platform through its MoMo mobile money unit. This is in partnership with banking group Investec and fintech specialist Electrum.
Together with the Payments Association of SA, BankservAfrica in 2023 launched PayShap, offering consumers cheap access to instant payments across participating banks via a cellphone number.
Bradwin Roper, CEO of fintech at MTN SA, outlined to Business Day the mobile operator’s rationale for the new partnership.
What is the difference between traditional mobile money and PayShap?
Mobile money on the continent has emerged because of a lack of infrastructure for sending money from, say, an urban area to a rural area. The ubiquity of that, the scale benefit of having localised agents in a small town, rural, plus in urban centres.
That remains alive. But the problem is that this space is becoming incredibly competitive. Any fintech coming into the market is trying to do that. It’s like a localised remittance.
We’re showing up in SA as an incredibly sophisticated fintech. In all fairness, the banks have done an incredible job on localised remittances, if you think about eWallet or Cash Send. That need is catered for in SA.
What we are doing is bringing a level of sophistication around financial inclusion through our Qwikloan, funeral cover, [international] remittances. For us to scale each of those verticals, including our free VAS (value added services), the secret to the game is making funding the wallet cheap, simple, real time.
So for us, [PayShap] is a massive strategic unlock for everything on the platform. The unlock is removing friction for the customer to get their wallet funded in real time.
Where do value added services fit into the plan?
Electrum’s own digital goods and services report points to the size of VAS being R35bn a month. My simple maths says that’s 10% of GDP. I think about all of that: electricity, airtime, Lotto and that kind of stuff. UPI’s integration means that they can cater for all of that on a digital transaction level and this is what we’re hoping we can transform in the SA context.
How do MTN’s fees compare with those of banks?
Unlike the banks, we charge no fees on this. The banks would levy a fee of like R1 or R2. Now that we’ve the funding mechanism, to get money into the ecosystem super slick our data shows that 85% of our customers, after they’ve funded their MoMo wallets are spending on the platform.
We don’t look like a localised remittance, so we enjoy an 85% spend on platform activity, which is quite rare for any kind of fintech. This means we’re really able to monetise. We do get commissions on all of these [products].
Unlike the incumbents that get both the commission and the fee ... because we’re late to the party and have the latest technology, we don’t have historical fees to protect. We passed that benefit on to the consumer. That’s what we’re doing with PayShap as well.
How big are the savings for consumers?
Typically, we’re saving customers about R55 a month, especially in rural and small town areas where the airtime pattern is daily purchases. Electricity pattern is between daily and weekly. Sports betting and Lotto can sometimes be daily. When you add all of those up in fees, it’s about R55 a month, which ends up being about four loaves of bread. That’s why we exist. How can we give you a loaf of bread in savings and fees a week.
How did MTN get into the PayShap programme as a nonbank?
Only banks are allowed into PayShap. This is a three party perfect partnership. Electrum is our technology provider. They get a win. [For] any fintech, the secret sauce is getting an easy, slick and cheap way to get your platform funded. So we win. The fees on PayShap are, arguably, less than half of what we would normally get for money coming in to MoMo. So we win in that regard.
And then you need a banking partner to register your proxy into Bankserv and that is Investec. They have found a commercial model to make that work. So everybody wins.
Finding the right technology partner and banking partner is how we got in.
It has not been easy. We have had to find ourselves legally and commercially. But what has united all of us is trying to make a meaningful impact on the base of the pyramid customer
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.