Rise of mobile cash transfer service

Mobile telephony is a big business in Africa today.

It is amazing how M-commerce has quickly hit the market with a bang.

In less than a decade, the small gadget has done what e-commerce was not able to achieve in eons.

It is believed that Africa has the fastest growing mobile phone market in the world today and interestingly the field is largely dominated by local service providers.

M-commerce has hit the ground running and daring to revolutionalise the way we live and clearly it is no longer business as usual.

Not all countries have fully adopted the technology though.

While countries like Kenya and South Africa are hitting a record 100 per cent penetration of mobile telephony others like Burundi, Eritrea, and Rwanda are still estimated to be at less than 30 per cent.

In Sub-Saharan Africa, it is estimated that only one in five households have access to banking or financial services.

Two years ago, over 70 per cent of Kenyan households did not have bank accounts.

The size of the unbanked market continues to grow despite the market having in excess of 40 banks.

Lack of formal financial services channels limits seamless market exchanges, increases inherent risks and limits opportunities to save and invest.

However, the ability of the cellphone to do much more than its primary role of communicating is what has made a big difference.

The money transfer services especially pioneered by Safaricom’s M-pesa in Kenya heralded a revolution in the way business is done.

Another company, Zain, has introduced a similar mobile money transfer service known as Zap.

Due to the earlier entry in the market, Safaricom’s M-pesa still dominates the market.