Freemium Model for Mahala Mobile Banking

Mahala, a new mobile banking service, will launch in South Africa in May 2011, using a "freemium" model. Peer-to-peer money transfer, money deposits or withdrawals and retail payments are offered without charge. Mahala expects to make money by selling additional services to users. See more information about Mahala here: http://www.mahala.co/

Mahala is likely to disrupt existing mobile banking providers in South Africa, as those providers now charge for transactions, generally based on the gross amount of each transaction or a flat fee per transaction.



South Africa is by far the country where mobile banking is most widely used on the continent. Still, about half of South Africa citizens don’t have bank accounts. Nearly 40 percent are either unemployed or work informal jobs paid in cash. Bank charges are high and banking regulations are so strict – such as proof of regular income – that they prevent many poor people form having formal bank accounts. Moreover, most South Africans live in rural or semi-urban areas where access to a bank is very limited or non-existent.

First National Bank of South Africa has over two million customers and attracts about 90,000 on a monthly basis. In 2009, FNB mobile banking customers made 56 million transactions worth the value of ZAR7.2 billion. Customers can send money to anyone in South Africa, whether they have an account with FNB or not.

South Africans often paid couriers the equivalent of USD 30 to USD 50 per transaction to deliver cash to relatives. Now they can do it for only USD 0.50 through Wizzit mobile bank networks.

Flash Mobile Cash by Eezi gives home shop owners the tools to be the bank for communities where formal banking infrastructure does not exist. The home shops, equipped with shared-phone ATMs, enable communities to withdraw, deposit or borrow small amounts of cash from their local township residence. The shopkeeper, as the banker, transacts using a GSM enabled device supplied by Shared-phone. “

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