M-pesa reaps from MTN’s legal tussle in bid to enter SA

Reports that MTN and Standard Bank could be forced to pay up to $136 million for a patent infringement could prove beneficial for M-Pesa as it seeks to enter the lucrative South African market, it has emerged.

Legal action against mobile company MTN and Standard Bank could mean their mobile money transfer service could be pending a legal decision, offering a window of opportunity for M-Pesa as it seeks entry into that market.

In the legal suit filed last week, 3MFuture Africa claims the two companies who recently launched their mobile money transfer venture infringed patent laws.

The company claims it was involved in creating a system for Standard Bank in 2001, during which it introduced the technology, but which was only registered as a patent in 2003.

3MFuture Africa is asking that the service be stopped pending a judgement.

As Vodafone prepares to enter the South African market using the M-Pesa platform that has over 9 million users in Kenya, the action could see the firm benefit if its competitor’s service is put on hold.

Like M-Pesa, MTN’s mobile facility allows people to transfer money using the mobile phone even if they do not hold a bank account, and is largely seen as facilitating access to financial services for low income earners.

Vodafone announced its intention to launch M-PESA in South Africa through its subsidiary, Vodacom South Africa, using Nedbank as its banking partner in February.

Telecommunications giant

The global telecommunications giant, which runs the M-Pesa service in Kenya through its associate Safaricom, is targeting approximately 26 million people in South Africa who do not hold official bank accounts.

Kenya is largely seen as a success story in the budding mobile money transfers market, being home to several products that leverage the mobile phone to extend financial services to subscribers.

Since M-PESA’s launch, it has facilitated the movement of over Sh401 billion in person-to-person transfers as of the end of March 2010.

Apart from Kenya, Vodafone has deployed the service with Vodacom in Tanzania and Roshan in Afghanistan, where the product is known as M-Paisa.

In total, the service has over 11 million registered customers, who use the service to transfer money, airtime top-ups and bill payments.

In Kenya, the M-Pesa has been extended beyond borders and now allows subscribers in the UK to send money to Kenya using the service.