As competition continues to heat up in Africa’s cross-border payments market, Capitec has partnered with fintech operator Mama Money to capture a bigger slice of the pie with cheaper transfer prices.
The movement of people and goods on the continent, and the encouragement of greater trade in the region, are creating the need for simpler, more affordable forms of payment.
In late July, now-retired Capitec CEO Gerrie Fourie told shareholders at the group’s AGM that the bank was set to launch a foray into the growing cross-border remittances market, targeting about seven African countries in a move that will see the group further diversify its revenue streams.
That plan is now coming together.
On Tuesday, SA’s largest bank by customer said it had signed a deal with Mama Money, which specialises in remittances to “dramatically reduce the cost and simplify sending money across borders for the country’s 2.4-million migrants”.
SA has a huge migrant community, particularly from neighbouring countries.
The bank is targeting Kenya, Lesotho, Malawi, Mozambique, Uganda, Zambia and Zimbabwe, countries from which migrants “have historically faced high fees and complex processes when sending money home to support their families”.
Over the years, the growth of competition in Africa’s financial services market has helped speed up the time it takes for payments to clear, while reducing costs.
The landscape includes players such as World Remit, Mukuru, MoneyGram, Nala, Chippa and mobile operators.
Typically, someone in SA wanting to send R10,000 in cash to Malawi might pay a bus driver R500 to physically transport the money. For many the risk is justified, with formal channels charging as much as 15% for such a transaction.
Fees for Mama Money via Capitec will start from 5%, with processing taking “minutes instead of days”, the partners said.
Francois Viviers, group executive of marketing and communications at Capitec, said: “We live on a connected continent, where the age-old tradition of supporting family and community is a fundamental part of our culture. Yet, sending money across borders has been expensive, complicated and stressful for millions.
“We see an opportunity to apply our ‘simple, affordable and transparent’ banking ethos to this problem. Our clients work hard for their money, and they deserve a solution that safely and affordably delivers more of that money to where it’s meant to go.”
Capitec, which has 24-million clients, says its customers are able to access Mama Money’s remittance platform directly through their mobile banking app, using the universal Mama Money token.
Recipients receive a 12-digit token via SMS, allowing them to collect cash from partner locations, including banks and agents across more than 70 countries, no bank account required.
“Mama Money and Capitec share the same principles about low-cost financial services to affect customers’ lives positively. It’s about more than convenience — it’s about dignity and fairness for people who work hard to support their families,” said Mathieu Coquillon, co-founder of Mama Money.
“When someone earning minimum wage has to pay R150 in fees to send R1,000 home, that’s money taken directly from a family’s food budget.”
Founded in 2015, Mama Money is based in Cape Town. The company, specifically targeting African and Asian expatriates, has more than a million users and downloads.
With Kabelo Khumalo
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