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What’s the future of banking? Well we know that in the future our mobile phones will replace money, and even our credit cards. Why? Because this is the device that is with us all the time and is always connected. But who is going to make this play? The banks? The cellphone operators? The phone manufacturers? Or a mobile social network?
Mxit is taking mobile money and payments quite seriously. Earlier this year the popular instant messaging service rolled out a payment option to restaurants, allowing users to pay for meals using the platform. More recently the service launched geo-fenced payment system GustPay, a standalone service for smartphones.
It seems the company wants to keep a close grip on its 10-million South Africa users with a partnership with Standard Bank (one of South Africa’s major banks) by launching another payment system. This new payment system, Mxit Money, is an app developed with FireID — a Stellenbosch-based startup specialising in mobile authentication.
In an interview with Memeburn, former Vodacom CEO Pieter Uys said that “cellphone banking has become so big that now it is the largest bank in that region. Your mobile device is being used for everything from buying electricity to paying taxes. It has become integrated into everything in countries like Kenya and Tanzania.”
Starting today, Mxit users will be able to send money to anyone with a mobile phone and to other Mxit users for free. The service will allow people to deposit and withdraw cash as well as buy airtime and electricity using money from their Instant Money account via Mxit Money.
Instant Money is an electronic currency from Standard Bank used predominantly for person-to-person money remittances where one or both parties are usually unbanked. Instant Money is also used to facilitate online payments without the need for a credit card or bank account.
Users can access Mxit Money as a contact within the Mxit platform. It is also available as a stand-alone iPhone app. This partnership allows the social network’s community to extend payments into the real world away from just transacting with virtual currency, Moola.
According to Mxit CEO Alan Knott-Craig, this will open the social network up to immense retail and trade possibilities giving South Africans a great opportunity to capitalise on the growing trend towards mobile payments.
“This partnership allows us to offer users the ability to transact in the real world from within their social network. Mxit Money becomes the portal to a digital marketplace of 10-million users who, with real money, can purchase content and access applications from our development partners,” says Knott-Craig. “To top it off, Standard Bank, an African bank, is showing the world how to integrate the old world with the new. A bank and a social network are working together to make life easier. Our users win, our partners win and the bank wins.”
The mobile payment space is riddled with technical, regulatory and user adoption challenges. Partnerships are key in the mobile payment game it seems when Vodacom, one of South Africa’s largest mobile networks, launched its mobile payment option MPesa, it chose to partner with an established bank, Nedbank.
Mxit’s alliance with Standard Bank makes sense as it bypasses the regulation and adoption. The bank seems to have enjoyed respectable success with its Instant Money offering, which gives customers the ability to securely transfer, withdraw and spend their money.
“In a competitive and ever-changing marketplace, it is essential for banks to provide innovative solutions,” says John Campbell, Head of Beyond Payments, Standard Bank’s innovations unit. “By partnering with a social network and integrating into the Mxit Money platform, we have demonstrated that Instant Money can be used both in the digital and real world to access funds, affect payments and transfer real money between people. We are proud to lead the digital sphere with Mxit, which continually evolves to meet changing customer and market needs. This is another demonstration of its leadership.”