Vodacom joins Tanzania telcos in cross-network mobile money transfer
Telecoms in Tanzania have partnered in a deal to adopt interoperable mobile money services. PHOTO | FILE
What you need to know:
The agreement between Vodacom and Tigo, which have six and four million subscribers respectively, means that users will be able to send and receive money whether using M-Pesa or Tigo Pesa on their mobile handsets.
Three operators, Airtel, Zantel and Tigo had reached a similar agreement in April last year but, Vodacom had been reluctant to join due to its market dominance in mobile money transfer service and fear of allowing other networks to access its customers.
Tanzanians can now transfer money across mobile networks after the country’s two largest telecoms struck an agreement following more than a year of negotiations.
The agreement between Vodacom and Tigo, which have six and four million subscribers respectively, means that users will be able to send and receive money whether using M-Pesa or Tigo Pesa on their mobile handsets.
Three operators, Airtel, Zantel and Tigo had reached a similar agreement in April last year but, Vodacom had been reluctant to join due to its market dominance in mobile money transfer service and fear of allowing other networks to access its customers.
The April pact was the first in Africa to adopt interoperable mobile money services.
“Tigo Pesa customers will now be able to safely and securely transact with millions more people across the country,” said Arthur Bastings, the executive vice president of Millicom Group, Tigo’s parent company, adding that it is hoped that the interoperability would help increase financial inclusion.
Mr Bastings also said the firm will pioneer similar agreements with networks in other countries where it operates. Tigo’s presence in the region is only in Rwanda and Tanzania.
Martin Warioba, the project manager, told The EastAfrican that interoperability is considered important because of its potential benefits to consumers, businesses and the economy.
Interoperability can help businesses manage costs, increase efficiencies through shared infrastructure and increase transaction volumes. Customers benefit from network effects and ideally from reduced transaction costs, according to Mr Warioba.
“Governments believe that interoperability can help advance financial inclusion due to reduced transaction costs and can also lower the cost of printing and managing cash,” Mr Warioba said.
However, Mr Warioba further said that interoperability service is not expected to lead to change of any law or regulation.
The Bill and Melinda Gates Foundation and Financial Sector Deepening Trust are funding the project to the tune of $5 million. International Finance Corporation (IFC), part of World Bank Group, is acting as the independent facilitator in the industry-led initiative.
The banking regulator Bank of Tanzania endorsed IFC as a facilitator and convener of expertise during this process. The central bank backing brought confidence to the industry players.
