eWallet, the name given to FNB’s mobile money mover, and the biggest of its kind in South Africa, has become a verb in the South African lexicon.
“I can’t wait to check my e-wallet at 7. I’m expecting numbers,” @FlyGuyTony tweeted to his followers; “Am so broke hie !! Please sent me money via ewallet,” cries @blueKGSemenya. “Dude, how’s the hangover? Should I e-wallet something….?” @Heiney_Boo tweeted to friend @Bra_Luvo.
Mobile money involves the use of a cellphone to transfer funds between people and bank accounts, to deposit or withdraw money, to pay bills or to buy services such as airtime and electricity.
Since its launch four years ago, 2.5 million eWallets have been created and R7bn has been disbursed through them. Growth is accelerating, with uptake up by 119% across FNBs operations in SA, Botswana, Namibia, Swaziland, Lesotho and Zambia.
Growth in Botswana and Namibia in particular, is racing ahead of expectations, with about 17% of citizens in Botswana and over 5% of the population in Namibia (in less than a year) receiving money into an eWallet.
“The growth in the African subsidiaries has been a lesson in how local conditions effect how people adopt and use a service,” says Yolande van Wyk, CEO of eWallet Solutions at FNB. “We noticed that Botswana and Namibia’s low population density contributes to the take-up. With a population density of less than four people per square kilometre in both these countries, there is clearly a need to send money across a distance.”
However in South Africa, the reverse is true. The wallet was initially conceived by FNB as a tool for its customers to transfer money to friends and family in other, more rural, provinces. But FNB estimates that 67% of customers use their eWallet to send money to friends and family nearby, while 37% use it to send money afar.
The reason for this is the well developed retail infrastructure – finessed by Shoprite – that allows consumers to send money from one province to another. “There simply wasn’t the pent up need to transfer money via mobile devices as there was in Kenya,” says Arthur Goldstruck, head of research company WorldWideWorx.
This is one of the reasons that mobile wallet offerings have failed to take off in South Africa. MPesa – which transfers so much money in Kenya the government has begun taxing the transactions – flopped in SA because it was marketed incorrectly and positioned wrongly. You cannot assume that one market in Africa is anything like another market,” says Goldstuck. “Consumers in SA have different needs to those in Kenya.”
However this does not mean that eWallet is redundant. “FNB is providing consumers with the first real mobile wallet service that allows you to store small amounts of money [up to R3000]. This is part of their success,” he says.
The bank has also launched a business version of the service which allows electronic transactions to people who don’t have bank accounts – thus removing cash from the system. “Consider the farmer who needs to pay seasonal workers who don’t have bank accounts or the insurance company that makes benefit payments or government that is disbursing small grant payments,” says Van Wyk. “These were cash transactions that are now electronic.” FNB has 374 active clients on this platform.
While FNB is pleased with its growth, one limiting factor could be the hefty fees associated with each transaction. Money transfers cost between R8 and R16.50 a transaction, while other transactions, like bill payments, cost R2.50 each.
Van Wyk says the cost of handling cash is expensive and the fee includes the withdrawal fee which is not paid by the person receiving the cash. Consumers using Shoprite’s money transfer service also pay a healthy fee on each transaction. “FNB should thank Shoprite for getting consumers used to these kinds of fees,” Goldstuck adds drily.
He believes the offering will become much more pervasive – particularly among urban youth who live on their mobile phones. FNB might lose the market share that they hold currently, but they will end up with a larger piece of the action as the market grows.
He adds that more innovation and disruption can be expected. “The next big disruption will be on price. Service providers are charging the fees they charge because the market will bear the price – not because it is a costly service to provide.”