Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

MOBILE telecommunications group MTN and retailer Pick n Pay are launching a mobile money banking system, a groundbreaking offering that has the potential to be South Africa’s answer to Kenya’s M-Pesa.

Called Mobile Money and provided by Tyme Capital, the service will allow cellphone users to set up an account from their phones and send money to any other South African with a phone. Cash deposits and withdrawals will be done through Pick n Pay’s chain of 775 retail outlets, as well as its Boxer Superstores.

The system is expected to be launched on Thursday morning.

News of the venture was leaked last week when its website was briefly visible before being shut down, and former MIH Internet Africa editorial director Arrie Rossouw tweeted that he was "proud to be associated" with the new "all mobile bank".

M-Pesa, provided by Kenyan operator Safaricom, has spearheaded the shift to mobile money, and about 80% of such transactions globally now occur in East Africa. Much of its success depends on the use of so-called "human ATMs", or a network of registered vendors that cash money in and out of the system.

M-Pesa was also boosted by lenient regulations that enabled Safaricom, a subsidiary of Vodacom’s 65% shareholder Vodafone, to deploy it without facing the same policy hurdles as traditional banks.

In South Africa, it is understood that requirements set by the Regulation of Interception of Communications and Provision of Communication-Related Information Act have been overcome because the Mobile Money account will be for a maximum of R25,000, with a daily transaction limit of R1,000.

The Mobile Money system is understood to be an advanced method of banking despite the simplicity of the mobile devices off which it will run. Pick n Pay will provide the physical stores and cash money in and out of the system. Users will be charged a small fee.

Customers will create bank accounts from their cellphones and use USSD, the underlying communications system that facilitates mobile banking and which is also deployed in M-Pesa.

Mobile Money users will be able to send money to any other cellphone in the country — as is already possible with other banking initiatives, including one by First National Bank — but only to South Africans as the system requires a South African identity number to be used.

Recipients will be able to create their own accounts on the fly.

Unlike the current wave of so-called mobile "wallets", such as Apple’s recently launched Passbook and Google Wallet, this service includes a bona fide bank account that can transact like any other bank account, including making electronic payments.

The banking licence is provided by Bank of Athens, which is also the required banking partner for Wizzit, another cellphone banking initiative in South Africa.

• This article was amended on November 22 2012 to make it clear that the system is called Mobile Money and that it is provided by Tyme Capital.