How Mobile Solutions Are Paying It Forward

Published 4 years ago

Mobile money services have not been very successful in South Africa. The new products for micro-payments must address the larger ecosystem of banks and retailers.

Cash is still king in Africa and most parts of the world. Yet, we cannot ignore the continued growth of mobile offerings on the African continent, from the uptake of smartphones, app usage, or digital and mobile payment solutions.

Today, it is possible to open a bank account from a smartphone or feature phone, and for small businesses to set up payment solutions directly from mobile devices. As technologies advance for micro-entrepreneurs, so too for micro-payments.


A new form of payment aimed at ‘paying it forward’, be it to a car guard, gardener, or a donation, has been introduced by South African startup Jini Guru, called uKheshe, which means ‘cash’ in Zulu.

The service allows a receiver to accept a tip or payment once a physical card with a QR code is scanned through the uKheshe app, by the sender.

The money accumulated can be cashed out at any Pick n Pay outlet in South Africa, making it an essential solution for those who don’t have bank accounts. The cards, attached to a lanyard, are of no cost and distributed freely; anyone can order a batch online, only incurring courier fees.

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Guru first started working with Pick n Pay about five years ago, which resulted in the startup building and integrating its mobile wallet and rewards platform with the supermarket’s new smart banking capabilities back in 2017.

“The mobile money marketplace in South Africa has been riddled with several failures and false starts over the last 15 years,” says uKheshe founder Jason Penton.

“We looked at these mistakes, registered our FSP [Financial Service Providers] and focussed on building a solution for the unbanked that could uplift and increase their earning capability, and after various iterations, and around a year of red-tape and coding, we were ready to share uKheshe with South Africa.”

uKheshe has two types of users: the receiver who is equipped with a QR code, compatible with a feature phone; and the payer who has a smartphone with the app installed to make quick payments.


The receiver, upon obtaining a free uKheshe QR code, can register via a USSD menu easily on a feature phone, and thereafter, check balances; withdraw; and transfer funds. “The users are charged a R5 a month admin fee ,” Penton says.

Withdrawal fees from Pick n Pay will cost R5, which is much lower than ATM fees; and those who purchase goods at the supermarket will pay a R2 fee.

Similarly, M-Pesa, one of the biggest success stories from Kenya and Tanzania, is a virtual banking system that allows users to transact with a SIM card by making payments and transfers via SMS, through Safaricom. The popular service, however, did not find the same success in South Africa, and was discontinued in 2016.

MD of World Wide Worx Arthur Goldstuck says M-Pesa in South Africa was launched in partnership with an elite bank, Nedbank, then with an almost unknown bank, and finally hidden away in USSD menus. “They [M-Pesa] did everything wrong, and the timing of the launch wouldn’t have saved them.”


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“uKheshe is probably making a mistake in its pricing, since it is being punted as an ideal way to tip the poor, it is baffling that the cost of withdrawal is practically the size of a standard tip,” Goldstuck says. “Again, with its emphasis on the poor, the R2 cost of payment for transactions suggests little understanding of the limited resources of the poor.”

But the company says another key proposition is that uKheshe card holders can transfer money to each other at no cost. “We see potential for an entire sub-economy evolving where uKheshe value is exchanged between users,” adds Penton.

“As a registered financial services provider, there are regulations in place to prevent money laundering and transferring large sums of money without being traced in the banking system,” says Penton on the account of the system being abused.


“We have a daily withdrawal limit of R3,000 ($220) and a monthly limit of R24,000 ($1,760). All sources of money into our system have to come from a banked individual and all transfers out are limited to the daily/monthly caps, in line with regulations,” he says.

Given that the majority of mobile money services have previously been a failure in South Africa, Goldstuck says the fundamental difference between markets within Africa is that South Africa already has an extensive and highly-efficient money transfer system through retail outlets, and people both trust and understand it.

“Furthermore, South Africa has a high-banked population, with more than 70% of adults having a bank account. In East Africa, fewer than 10% had a financial instrument before M-Pesa came along.”

A downside to these new products is that they are specific to one retailer, says Goldstuck. “They need to be interchangeable and brand agnostic, so that they can be used elsewhere, which requires an ecosystem that incorporates most banks and retail chains; and right now, we have deals rather than ecosystems.”


More competition is expected in South Africa as mobile operator MTN is set to relaunch its Mobile Money service in the first quarter of 2019. The service currently has more than24 million active subscribers in more than 20 markets.

– Nafisa Akabor