As the VCL Financial Services Vodacom M-Pesa product turns 10, Vodacom Financial Services (VFS) managing director Palesa Mphunyetsane says the service has changed the lives of individuals and companies in terms of cost cutting and security enhancement. In this interview with theReporter’s ‘Mantšali Phakoana, Mphunyetsane shares M-Pesa’s journey from 2013 and its vision to accelerate financial inclusion in the country.
Tell us about M-Pesa and how the idea came about.
Vodacom M-Pesa was launched as a product of telecommunication company Vodacom Lesotho in July 2013. In 2021, after realising the growth, the product turned into a separate entity from Vodacom Lesotho and became known as VCL Financial Services (Vodacom M-Pesa), which 100 percent owned by Vodacom Lesotho.
VCL Financial Services is regulated by the Central Bank of Lesotho (CBL) because it is a financial services company while Vodacom Lesotho is regulated by the Lesotho Communications Authority (LCA). Both Vodacom Lesotho and Vodacom M-Pesa have their own board of directors.
The idea of Vodacom M-Pesa originated in Kenya. It came after we realised that a lot of people were trading airtime. Sending money to far places or other countries was a challenge. People used to send airtime to others so that receivers sell it to get cash.
M-Pesa emanates from a Swahili words; M stands for ‘Mobile’ and Pesa for Money, (Mobile Money). We borrowed that name because of the product’s popularity that it had gained. M-Pesa is Africa’s leading mobile money service with more than 604,000 active agents operating across the Democratic Republic of Congo (DRC), Egypt, Ghana, Kenya, Lesotho, Mozambique and Tanzania.
It was easy for us to borrow that name because globally when we talk of M-Pesa people are familiar about the product.
How does Vodacom M-Pesa work?
Customers register for the service at authorised agents – often small mobile phone stores or other retailers such as barbers, butchers, bakers, etc, and then deposit cash in exchange for electronic money. Customers can then send money to their family or friends throughout the country.
Once they have registered, all transactions are completed securely by entering a PIN number and both parties receive an SMS confirming the amount that has been transferred. The recipient receives the electronic money in real-time and then redeems it for cash by visiting another agent. Alternatively, they can spend it at an M-Pesa merchant.
What are the notable milestones that Vodacom M-Pesa has made in its 10 years?
The biggest milestone was when we became a separate entity. Our team has drastically grown because we started as a team of three but now, we talk of over 30 employees.
When Vodacom M-Pesa was introduced and launched to the market, it started with basic services such as sending and receiving money as well as buying airtime. But as it kept evolving, we introduced other convenient payments.
Just a year after this product was launched, we introduced bill, bulk and merchant payments. Bill payments enable customers to pay their bills to services like DSTV, WASCO and LEC (Lesotho Electricity Company) with M-Pesa. With bulk payment, companies are able to pay a group of people at the same time. The bulk payments solution makes it easy for international organisations, government entities and companies to pay their employees’ salaries, most construction companies have opted for it. This kind of payment is cost effective, convenient and very secure. Later that year, we introduced merchant payments whereby customers pay or buy with M-Pesa to avoid reduce the risks of going around with cash.
We introduced Open API technology to allow business partners who want to integrate with our platform to monitor services for themselves. We have created an easy connection with them, which was good because it has now opened easy money circulation to entities like Revenue Services Lesotho, formerly LRA (Lesotho Revenue Authority). Also, if one pays tax there is now M-Pesa payment option.
This service has also helped a lot during the COVID-19 pandemic, especially when the movement was limited to certain groups of people. Open API had reduced chances of people touching each other.
The system assisted people to pay from home. The Ministry of Education of Training has also seen its importance because now people can pay examination fees through M-Pesa without having to walk around with cash or queuing in lines to pay for exam fees. Most schools and insurance companies have also opted to use this kind of payment system.
In 2015, we introduced airtime to Mpesa (A2M and IMT); A2M is the world’s first innovative service to covert airtime into M-Pesa. IMT was then launched, to enable customers to receive money from South Africa using Mukuru.
We have further introduced ticketing service and enhanced user experience confirmation on M-Pesa payments. We have also introduced beneficiary list on the send money and bill services. Another milestone was the introduction of LEC (Lesotho Electricity Company) token re-print service.
The launch of ticketing in November 2016 enabled customers to buy tickets using M-Pesa. Insurance payment was also introduced for both Alliance and Metropolitan Lesotho.
We also successfully upgraded our system in 2017 whereby we were migrating to a brand-new platform for our M-Pesa services; a move robust and stable mobile money platform that we are confident addressed all our customers’ biggest concerns.
We again introduced M-Pesa bundles to give customers the option to buy bundles using M-Pesa. In an effort to improve the experience of our merchants and customers we introduced the M-Pesa Point of Sale (POS), an easy and simple payment using customers’ accounts in a completely seamless manner. M-Pesa customers’ activation tool encourages customers to register and earn commission for every new customer registered.
We also launched the bank to wallet service which allows M-Pesa customers to seamlessly transfer money from their Standard Lesotho Bank and Nedbank Lesotho accounts into M-Pesa account. There was also introduction of M-Pesa service reversals that enable customers to reverse money sent to wrong recipients. In August same year, we opened a platform for group of people to save money and that service is Mokhatlo Savings Account. It is a savings account for groups of people to save money for a common goal.
We have also launched M-Pesa App designed to create an alternative to USSD and offer a seamless customer experience.
Earlier this year, we upgraded our system again, moving from physical hardware to cloud based platform. These solutions are dynamic; they enable us to put more services effectively. They are not easily interrupted or subjected to being fixed or maintained. The solutions assist us to deliver our products instantly. Basically it is more robust and provides customer experience and improves service delivery.
M-Pesa has also created more jobs, with more agents spreading countrywide. There are also local companies that assist us to develop our products.
How many users have been registered with M-Pesa by now?
We have over one million active subscribers who transact every month. The value of transactions through our platform is around M1.6 billion on monthly basis. We have also over 12 000 active agents countrywide. We have over 9 000 merchants. This says we are still growing. We have our team on the ground recruiting agents and merchants on the use of M-Pesa. For financial inclusion, we have 80 percent of Lesotho’s adult population.
What are some of the challenges that you encounter as a company?
Our major challenge is liquidity. Most of our agents, especially in remote areas, do not have enough cash to circulate to the customers they serve. Since some of them own small shops that sell small items, they are not able to produce enough cash, so in most cases when customers want cash it is not available. To address this, we have advised them to practise merchant service, whereby customers buy with M-Pesa without even withdrawing money. Tjis has been a success.
The other challenge that still remains is of subscribers who still do not understand how the product operates. Some of them still fail to confirm receivers’ name before they sent money or confirm the agent’s name when withdraw money. This has resulted in many customers losing money to the wrong number. We need to make our customers understand the need to be vigilant when doing any transaction to avoid unnecessary mistakes. We help with reversals where we can.
Also, some of the users take time without repaying after requesting for M-Pesa loan. They don’t know that by doing so, they reduce their chances of qualifying for more loan amount. We still have a long way to go in creating public awareness on Vodacom M-Pesa. The other challenge is that we have agents still being robbed. Even though such crimes are beyond our control, we always advise our agents to be more vigilant all the time, to avoid being robbed.
