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TMCNet:  Will M-Pesa Fly In Europe? [Global Finance]

[July 03, 2014]

Will M-Pesa Fly In Europe? [Global Finance]

(Global Finance Via Acquire Media NewsEdge) EUROPE Vodafone's M-Pesa, the mobile money service that revolutionized banking in Africa, has landed in Europe.

So far the service is available only in Romania, but analysts predict that London-based Vodafone, one of the world's largest mobile-network operators, will use this installation as a testing ground for a more extensive rollout across Central and Eastern Europe.


The immediate plan is to make M-Pesa available to seven million Romanians who transact mainly in cash and to customers with bank accounts who want the convenience of being able to access and transfer money using their mobile phones.

Nairobi-based M-Pesa has been exported to nine countries, including Tanzania, Mozambique and the Democratic Republic of Congo. But nowhere has it achieved the level of market penetration it enjoys in Kenya, where it was first launched in 2007 by Safaricom, which is minority owned by Vodafone. Today in Kenya, M-Pesa has approximately 17 million subscribers conducting more than two million daily transactions.

That success is owing first to the fact that Safaricom has a dominant share of Kenya's mobile market. Secondly, M-Pesa has gained the support of a large network of agents such as convenience stores and gas stations. "M-Pesa builds on a unique circumstance in the Kenyan cellphone voice market where Safaricom has near-monopoly status, with some 80% of subscribers," says Michael Fuchs, a finance and development specialist who worked for the World Bank.

Whether M-Pesa can attract the same kind of commitment from merchants in countries such as the Czech Republic, Poland and Serbia remains to be seen. But that's what Vodafone will need to do if it hopes to increase loyalty and market share at a time when mobile-network operators everywhere are struggling to counter falling prices for basic voice and data services. -Erik Heinrich (c) 2014 Global Finance Media Inc.

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