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SmartPay sets out to extend financial services to the unbanked via a card

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SmartPay Managing Director, Miriam Mutizwa

Yesterday we attended a press briefing by a new payments company called SmartPay. The company has launched a financial services system that users can access using a smart card. In the background, the SmartPay system is basically a switching system enabling financial institutions to receive deposits, users to withdraw money, merchants to process payments, organisations to pay salaries, users to transfer money amongst themselves, to save money, pay bills, pay bus fare and various other uses.

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All these uses will be possible via a smartcard which the user carries around and transacts with at special Point of Sale devices that SmartPay is already deploying around the country. Effectively the user and the different other stakeholders transacting with the user, will supposedly benefit from the cashless transacting.

The system uses the Universal Electronic Payment System developed by a South Africa based company called NET-1. The system is also hosted in South Africa by NET-1.

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SmartPay, according to the company, is expected to link the payment systems of all banks, savings and loans companies and Building Societies in Zimbabwe. It’s a model they call “banking without banking halls”. The point, SmartPay Managing Director Miriam Mutizwa says, is to reach the majority of transacting Zimbabweans who currently do not have access to a bank account – the unbanked.  Mutizwa expressed some confidence that banks will find this new service quite attractive, and through the Reserve Bank of Zimbabwe, will all keenly sign up.

This of course is not guaranteed. Existing switching systems that have attempted to do just what SmartPay intends to do – organisations like ZimSwitch – have failed to sign up all banks locally. But that’s not the only potential problem here; the banks themselves are gradually ceasing to be the centre of financial services for these micro payments that the unbanked carry out. Mobile operators are moving into the centre and they are determine to disrupt the traditional banks.

To make matters worse, the SmartPay solution doesn’t have a mobile side; “not yet, but we will be adding that in the coming months” says Mutizwa. This alone could be SmartPay’s undoing, unless they do something about it soon enough. Using SmartPay in its current form, one can’t, for example, check their account balance via SMS, or have a transaction that’s just been effected on their account confirmed (or at least notified) via a mobile device. This age is about information being available at the finger tips, whether that’s via SMS, MMS, 3G, or fixed broadband internet.

We also feel that the one thing their marketing efforts may suffer from is the problem of trying to be everything for everyone. It would make more sense to solve one problem and solve it well. EcoCash for example has come to the market first to solve the local remittances problem, and so far it looks the market is accepting this solution, at least their record subscriptions numbers (ok, some of it pushed by free airtime offers for signups) are testimony to this. Later they will do merchants, utility bills and other functionality, once their system has been proven to be robust and secure enough by the market.

Google in Kenya, has also come to the market with a card based payments system, Beba, to solve a specific problem; to help people save money by enabling them to pay bus fare on matatus (our Kombis in Zimbabwe). In Kenya, just like in Zimbabwe, “The bus conductors and matatu touts have been known to hike up bus fares the moment it starts raining or when there is traffic.”

You can download the full SmartPay press release sent out yesterday here.


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14 thoughts on “SmartPay sets out to extend financial services to the unbanked via a card

  1. 2yrs of hard research and you think you can just steal and walk away with it?…the celebrations shall be short-lived, and by the way, the real MD for that company is some ZANU PF old prick called Charles Nyachowe, not that front he is trying to portray…threats dont work anymore!

  2. typical Zimbo, either negative or politicing everything! Try your luck lady, you never know

  3. The author’s analysis seem to pour called water on (than promote) this project which I think is innovative. While it is ok to mention the shortcomings, I think the author should concentrate on the positives

  4. well being positive is good.personnaly i dont see anything new in this. i dont want have anything to do chisina phone or internet.how are they going to bank the unbanked. i am failing to find it.

    1. not exactly… news, mixed with opinion, mixed with historical references, and some references to other blogs, some links to similar services. in terms of presentation, yes it leans mostly to the author’s opinion about the subject and his take on the new service.

      let’s just loosely call it an article.

  5. I was crossing my fingers and holding my breath as I was reading through SmartPay’s press release hoping to see something on e-commerce (particularly Online Payment/Money Transfer) but to no real surprise there was zilch! Its just another heavily flaunted local start-up entering a saturated market and hoping to strike gold!

  6. These services only work when there is rapid deployment and rapid acceptance. That is why Mpesa and even EcoCash is huge. Its all about network effects and the value of the networ5k increases with the growth of subscribers. There is nothing SmartPay is touting that eTranzact is not doing. eTranzact failed because they made their card very expensive and as rare as, more rare than diamonds. They thought making it expensive would pull others to want it which didnt work. EcoCash is for the masses and easy to understand and that is why it succeeds. Witness the fact that Kingdom Cellcard was the first on the scene but it did not deploy as rapidly and now it is second to Ecocash. Cellcard manuals clearly show you can pay merchants but just how many merchants do you know to be using it? Yet Ecocash, a latecomer, is about to activate the pay merchant facility. You will remember that kingom was the first eTranzact bank and now they are on to Cellcard.

    Anyway, as for SmartPay, network effects matter. What incentive will there be for someone to have their card on top to Ecocash (once linked to TN Bank) or Cellcard. if your grandmother now already has EcoCash, why bother using smartpay? Another service will simply confuse people and they will resists switching to Smartpay, or even using it.

    Smartpay would have done itself a favour by entering a market space that is not occupied by anyone at the moment, literaly, online payments. Otherwise i dont see them going very far with their eTranzact copy-cat.

  7. Payment models that integrate card and mobile platforms have a far greater chance of success especially if they are interoperable across networks and banks. Zimswitch already have an across-banks platform which they are now escalating to mobile. The majority ofbbanks are signing up in a rush, they have seen the light. Ecocash proponents say so much about subscribers numbers but very little is said about transaction statistics which is where the money is made. The Zim cash ecosystem is oiled by banks and the informal sector cash circulation figures appear overstated. There is need for a wider deployment of an interoperable POS infrastructure which can complement mobile and card based transactions. Econet realised they needed to integrate into the banking system sooner rather than later. If we were using our own local currency, needless to say the dynamics would be different. Smartpay needs mobile integration, and availability whilst market confidence may take time to build. The value proposition does not appear unique.

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