Mar 8, 2012

The M-PESA Prepay VISA Card

The convergence between mobile phones, Internet transactions through e-Commerce and VISA/MasterCard Cards is taking shape globally. Kenya has been in the forefront with an innovative product combining the three platforms; mobile phone, e-Commerce (online Internet buying and selling) and VISA Cards. 

I&M Bank partnered with Safaricom to issue co-branded Prepaid VISA Card that allowed M-PESA Subscribers to transfer funds from their mobile phone e-Wallets, into a VISA Card.

Kenyans are averse to credit cards which they feel come with punitive fees and charges. Banks on the other hand set stringent vetting procedures before approving issuance of credit cards to customers.

In view of the above, coupled with the convenience that M-PESA has created, transferring funds from an M-PESA Account to a VISA prepaid card has created flexibility much needed by the customers. They are able to set their spending power without borrowing from the banks, at an affordable, yet convenient way.

The Visa Prepaid Card has played a complementary role to the existing M-PESA services as follows,

·         International acceptance; M-PESA is a local money transfer service, (attempts have been made to link it to UK), after allowing money transfer from M-PESA to the Visa prepaid card, there has been a lot of international transactions taking place using the M-PESA VISA Card; customers, especially SME’s have their business partners or customers sending via M-PESA funds to the Safari Card. They in turn use the card to pay for hotel accommodation abroad or even buying merchandise to come and sell back at home;

·         Wider reach; Sometimes M-PESA  agents  may run out of float which makes it difficult for customers to access their funds; moreover, during late evenings, agents close shop;  customers may transfer funds from their mobile phones to their prepaid Visa cards and either transact at merchants’ Point of sale machines (POS) in hotels, hospitals, petrol stations, supermarkets,  or draw cash from VISA branded ATMs locally or internationally;

·         Convenience; Due to the high number of M-PESA subscribers, queues have become long, sometimes customers line up twice, to withdraw shopping money, only to  queue again to pay for the goods; such customers may transfer the funds to their Visa cards and shop.

·         Internet Usage; progressively, many people have started shopping online, to purchase software, books, pay subscriptions etc. Such customers may transfer money from their M-PESA Accounts to their VISA prepaid cards. Many web hosting customers are using the M-PESA Safari Card to pay online. Professionals such as doctors, lawyers, engineers and lecturers are using the M-PESA card to pay for journals, periodicals and professional subscription fees online using the M-PESA VISA Card.

·         Introducing the unbanked to formal banking; many people are unable to access formal banking, the M-PESA Visa card will creates an online statement which the unbanked can use at a later stage to open formal bank accounts and even access credit. This is definitely a form of Corporate Social Responsibility for the parties involved.

·         Financial Literacy; some customers will certainly learn to check their statements online, currently; they know how to check their balances from the mobile phone hand set.

·         Target top end customers; M-PESA has totally revolutionized local money transfer, it targets customers across the divide. However, top end customers get inconvenienced, allowing money transfer from M-PESA to a Visa prepaid card will carter for the needs of the high-net-worth.

The prepaid card market in Kenya remains unexploited; it offers an opportunity for growth. It presents great potential for Safaricom together with I&M Bank in the retail market.
Currently, prepayment is already established in certain sectors, especially in the mobile phones. Safaricom is the leader in this sector.

Prepayment reduces issuers’ risks and helps to target and attract new customers.
A whole range of Visa prepaid cards are now being offered by banks and websites.