Vodafone brings Africa's M-Pesa mobile money to Europe

Mon Mar 31, 2014 10:06am EDT

* Launch targets 7 mln in Romania who mainly use cash

* M-Pesa has 16.8 mln active customers in emerging markets

* Mobile payments expected to grow rapidly in coming years

By Kate Holton

LONDON, March 31 (Reuters) - Vodafone brought the mobile money service that has revolutionised banking in Africa to Romania on Monday, offering M-Pesa text-message transactions to millions of customers in its first push into Europe.

Vodafone said it had chosen Romania to target the seven million people there who still mainly use cash rather than cards, and others with bank accounts who could still benefit from transferring money by text.

Customers can use M-Pesa to pay for goods, pay bills, make deposits and withdraw cash from authorised agents. Users will be able to transfer as little as one new Romanian leu or up to 30,000 lei ($9,200) per day.

"The majority of people in Romania have at least one mobile device, but more than one third of the population do not have access to conventional banking," said Vodafone's director of mobile money, Michael Josep.

Services such as M-Pesa have helped Vodafone, the world's second largest mobile operator by customer numbers, to support revenues and grow customer loyalty at a time of falling prices for basic telecoms services such as calls.

The British group launched M-Pesa in Kenya in 2007 through its Safaricom operations. Since then the service has spread rapidly and in the last 12 months it has rolled the service out to its operations in Egypt, India, Lesotho and Mozambique.

About 16.8 million customers were actively using the service by the end of last year, making more than $1.2 billion worth of transactions per month.

Vodafone had 8.3 million customers in Romania at the end of last year.

PIECE OF PIE

"Vodafone believes that mobile money could reach around 10 percent of service revenues across its emerging markets businesses over time," analysts at Espirito Santo said, of the company's ongoing revenue stream that strips out one-off costs.

"The move in to Eastern Europe therefore is encouraging, though we do not expect any meaningful contribution from Western Europe at this time."

While slow to take off in all parts of the world, global mobile payments are predicted to grow rapidly over the next few years, with telecoms groups, retailers and banks all trying to secure a piece of the pie.

While the focus in emerging markets has been on text-based transactions, the focus in mature markets is on developing contactless payment systems to allow consumers to pay for goods by swiping their phones on a terminal in a store.

The use of smartphones has already enabled consumers in mature markets to transfer money and check their balance via banking software on their handsets.

In Europe Vodafone is likely to focus its mobile money service on east or central Europe. It also has operations in Hungary and Czech Republic and a presence through partnerships with other operators in Latvia, Poland and Austria.

In Romania, Vodafone customers will be able to transfer money via the text messaging technology once they have activated the service at a Vodafone retail store, participating retail outlets or through authorised agents.

($1 = 3.2448 Romanian lei);($1 = 0.7271 euros) (Editing by Pravin Char)