What Exactly is Mobile Money and How do I Use It?

Mar 07, 2016
Author: Ean Barnard

Are you in need of quick money with no access to banks? Never fear, mobile money is here!

Africa is a very interesting place. Africans like doing things their way. That is why in 2002 when banking branches weren’t that accessible, Africans decided to develop their own way of banking – mobile money. The currency that drove this type of banking was to be airtime. Africans love their mobile handsets and soon they bridged a finance gap by making airtime a currency through which everyday purchases could be made. With the mobility of airtime vouchers, people could send mobile money to any place in the country – as long as the sender and recipient both had a mobile device with which to communicate with.

Mobile money is exactly what it says. It is money on cellphones.

It didn’t take long for South African banks and network providers to catch on. When they saw the potential of mobile money, discussions flared up with network providers MTN, Vodacom and Cell C. Please note Cell C still only provides an Airtime Share service. It is exactly the same method used to birth mobile money but it isn’t exactly making use of a mobile bank account.

So how do I use mobile money?

How do I open a mobile money bank account?

Different network providers have different codes to call. The basic steps remain. Call the relevant code of your network provider either Vodacom, Cell C or MTN. Follow the on-screen instructions, accept the terms and conditions, set your password, verify your details and you have a mobile bank account. Instantly ready to use.

How to deposit funds into my account?

Before you can start transacting there needs to be funds in your account. You know either have to deposit money from your own bank account into the mobile bank account or someone else has to pay mobile money into your mobile bank account. Depending on the safety measures of your service provider – you first need to log in or verify this transaction.

What can I do with a mobile bank account?

People can send you money via their bank accounts or their mobile bank accounts. You can send money to mobile bank accounts. You can buy prepaid services like electricity and airtime. You can withdraw cash at till points. You can even repay loan instalments via mobile money.

How to withdraw money from my mobile bank account?

You can withdraw cash at till points by following your service provider’s methods or you can acquire a mobile bank account card and swipe like a normal debit card.

Why do people find it so attractive?

Mobile money is a great way to bridge a gap between individuals who don’t have bank accounts. It is now possible for someone with a bank account to pay someone without one by paying money into a mobile bank account. Now people in rural places who are unbanked because of a lack of infrastructure has the opportunity to enter the economy through mobile money.

The Pro’s of mobile money:

Mobile money is a cheap form of banking. It requires less cash in this process, therefore, there are fewer fees involved with this type of banking. It is possible for a whole cycle of payment collection and payment to take place without the need for the mobile money to be converted into actual cash. Unbanked individuals can enjoy safe electronic ways of banking. Thanks to mobile money it is even possible for unbanked individuals to acquire a credit record via their mobile bank accounts. A mobile bank account doesn’t require a proof of address. A valid ID number and cellphone number is enough to start an account.

The Cons of mobile money:

Mobile money will remain in the currency in which it was initially sent in – this is particularly troublesome when mobile money is sent abroad. Mobile bank accounts have low limits attached to the service. South Africa’s strict regulations strong arms mobile money service providers to partner with banks. The problem with this arises in the inherent competition between cheap mobile money and conventional banking. Banks will shoot themselves in the foot if they allow cheap mobile money to dominate the banking market of South Africa. Thus - little innovation will take place in the South African mobile money market when banks steer mobile money.

Banks are however concerned about their customers and are offering ways to make use of mobile money.

FNB’s eWallet is leading the charge with mobile money provided by banks in South Africa. It has topped the R1bn a month mark in July 2015. It is important to note that mobile money will not replace conventional banking soon. There is still too much of society’s needs being fulfilled by the synergy of bank accounts and financial service providers.

Mobile money is here to stay at this stage

Whether banks like it or not. It is cheap. It is accessible. It is safe. South Africans will keep using it. Some South Africans still cling to their hard earned cash in the form of paper, but our economy will call for some innovative ideas to curb high-cost banking. Mobile money could be one of the answers. Who knows? Regulations regarding mobile money could be eased in the future. It is a definite prospect to keep open should conventional banking become too expensive to you.

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