Vodafone has launched its mobile payments service M-Pesa in Romania.
- Customers will be able to transfer between RON1 (USD0.31) and RON30,0000.
- The service can be activated in 300 stores initially and Vodafone claims it will covering 6 million subscribers, growing to 2,000 points of presence by end-2014.
Following international expansion M-Pesa now has 16.8 million customers in Kenya, Egypt, India, Lesotho, and Mozambique. Vodafone will view M-Pesa’s launch in Romania as a trial for further deployments across emerging European economies. Vodafone will continue to aim expansion of M-Pesa at emerging economies where penetration of banking services are low; in Romania Vodafone estimates that 35% of the population does not use banking services. These markets are also characterised by a high percentage of lower-value, pre-paid subscribers. Should the service be successful in Romania Vodafone will look towards expanding it to Albania and Turkey, which are predominantly prepaid markets. For Vodafone to take advantage of the low banking penetration figures in Romania it needs to expand its distribution network quickly, to make storing and transferring money through M-Pesa an attractive proposition compared to cash;. M-Pesa’s success in other markets comes from a number of factors including:
- Device compatibility: accessible via SMS and/or USSD, M-Pesa will work on every mobile handset and does not require specific technological features such as NFC or support for smartphone apps
- A true banking alternative: in more developed economies operators have to deploy mobile financial services that are complement to and compatible with existing banking and credit card services. In emerging economies where there is a significant un or under-banked population, M-Pesa acts as alternative to a traditional bank account.
- Clear use-case: the lack of alternative financial services, and the use of M-Pesa for activities such as domestic remittances, utility payments etc. helped drive early adoption.
Vodafone is continuing to push into mobile payments in Western Europe. In December 2013 it launched a mobile wallet service in Spain and Germany, with further expansion set for the Netherlands, UK, and Italy in spring 2014. A major stumbling block for NFC-based mobile payments services in Europe, such as Vodafone Wallet has been ease of use with several layers of security, discouraging use, coupled with sparse coverage of NFC-enabled points of sales (POS) terminals. In more mature markets, mobile operators face a more significant challenge in driving mobile money services. The widespread penetration of bank accounts and credit cards, coupled with the plethora of alternatives such as smartphone banking apps and payment options tied back to bank accounts mean the role of business case for mobile operators in this space is less clear. The UK operator consortium Weve, focused on mobile advertising, commerce and payments services, announced plans in early 2014 to roll out an NFC-based payment service in conjunction with MasterCard, but it lacked banking partners at the time of its announcement.