Why Mobile Pay’s Tangaza platform is a better alternative to offerings from mobile operators. BY LUCY MORANGI
In January, a new mobile money banking and transfer system was launched. Expectations were high that Mobile Pay Ltd’s Tangaza platform would increase efficiency in provision of financial services and broaden access. Oscar Ikinu, the firm’s managing director and designer of the platform says it is unique from services offered by mobile operators in that it works across all existing networks. Existing offerings are mobile network specific meaning one requires a sim card from the operator. Users can access Tangaza’s services from any network in Kenya by dialing *321#. Tangaza also allows Kenyans without a mobile phone to open an account and send money using their I.D.s. The person uses their fingerprints to withdrawal and send money at the agent.
And just like the mobile operators’ services, Tangaza makes it possible to send money using a mobile phone. Recipients receive a text message alerting them of a transfer and which they use to withdraw the money from any of its agents.
In the last five years, mobile phone-based financial services have become widespread. As a result more people have access to several types of financial services including money transfers, micro credit, mobile bill payments and even savings.
Still, less than 40% of the population uses these services, an indicator of the market’s potential. New operators like Tangaza are further encouraged by the fact that only one out of ten people have bank accounts, making the case for mobile-based financial services even stronger.
By June Tangaza money transfer platform’s 80,000 registered users had moved KSh791 million through its 1,100 agents in the country.
Tangaza is banking on its ease of use and simple transaction requirements to build a critical mass. Registered users don’t need a mobile phone and neither are they required to produce identification documents before they can transact.
“Among low income groups and those who cannot read or write, these requirements hinder access to financial
services” says Mr Ikinu. “What these people need are simple and fast transactions that often involve small amounts of money.”
He adds that Tangaza agents are well aware of “know your customer (KYC)” requirements. “Customer data is captured once – during the registration process and they don’t have to keep asking for it when a user is transacting.”
During registration, agents use Personal Digital Assistants (PDA) devices to capture user details such as identity card number, date of birth, place of birth, district, location and sub-location among others. In addition, a biometric device to scan fingerprints and a customer is issued a four digit password that is used during transactions.
They scan two finger prints—the thumb from each hand—and take digital photo of the user. The information is relayed in real time to a central database that is integrated to the Registrar of Person’s database. “Tangaza is currently the most secure money transfer platform,” he says.
The system can register two types of accounts namely an ID card-based account for those without a mobile phone and a SIM card account. A Tangaza account can be used to send and receive money, pay bills and buy air time among others.
The ID account has to be linked to a SIM card for a user to access the account via a mobile phone. The maximum amount of money that can be held in the accounts is KSh 100,000 while the total amount that can be sent in a day is KSh140,000.
Mr Ikinu, an ambitious individual who likes to dream big, is an Architect and an Urban and Regional Planner who studied for both degrees at the University of Nairobi. In January 1994, nine months after graduating, he left for Dubai where he worked in an architectural firm.
Later, he set up his own architectural office in Dubai to design real estate projects. “At that time some buildings were being rented or sold while they were still in the drawing table, meaning a lot of money was flowing into the country.”
In 2004, after working in Dubai for ten years, he returned with the idea of starting real estate projects just like in Dubai.
He soon realized Kenya did not have the infrastructure to support huge city sized real estate projects both in terms of reaching every Kenya and in terms of access to financial services. After studying the market he concluded that a mobile phone service addresses both challenges – access to financial services and access to information.
Using his contacts in the Kenya, he put together a group of investors to back his idea. His pitch: “If people can be given opportunity, their potential to create wealth increases.” Although skeptics said the system could not work due to competition, he managed to raise the funding he needed.
His next hurdle was convincing industry regulators to license a platform developed by a little known start-up and which no one was sure would work. “There were no regulations for this kind of service at the time and maybe they didn’t know where to start.”
About the same time Safaricom was working on MPesa, the first mobile money transfer service in the country. In March 2007, the operator launched the service and two years later Airtel, then Zain Kenya, followed with a similar product. Ten months later, Yu launched YuCash and last year integrated telecommunications provider Orange launched Orange Money.
It was just the kind of ecosystem Mr Ikinu was looking for: desperate enough to require an interface and dynamic enough to attract application developers and other innovators. Presently, more than 100 applications are running on Tangaza.
“People need to make money by using their phones to do business.”
The most popular service is person to person money transfer and the second is an application that enables users to buy and sell stocks at the Nairobi Stock Exchange (NSE) using a mobile phone. In December last year, Suntra Investment Bank teamed up with Tangaza to launch an online trading platform called Suntra Real Time where investors access real time prices of stock on their computers and through mobile phones.
Mr Ikinu says the system has reduced the time it takes to place, execute and receive money in a share sale transaction.
“On average, it takes between one to seven days to complete a transaction from order to having cash or shares in your account, but the online trading system can take as little as five minutes.”
Businesses such as retail chains, landlords and financial institutions can also launch applications allowing customers to pay using the platform. The firm is presently working with Saccos to develop a mobile application for their members.
He is upbeat about Tangaza’s prospects and its transformative potential. “The platform will give more people access to the financial system,” says the tall, heavyset executive. “In addition, it will increase transactions between businesses and customers.”
Although the system works across all networks, users pay a transaction fee based on the amount being transferred. This has made it more attractive to other mobile money transfer agents. In fact, some operators have allowed their agents to use the platform.
Many agents have more confidence in the system than in mobile operators’ proprietary systems. In one case, it helped nab a fraudster who was defrauding agents in the Nairobi region. By using the finger prints and photo provided to Tangaza during registration, the offender was easily identified and traced.
“We are investing heavily in anticipation of future growth,” he says. Most of that growth is likely to come from rural areas, where the firm is aggressively recruiting agents. Once an agent has been vetted, they pay a deposit of KSh50,000 and are issued with a PDA. The devices can be powered by solar meaning the service can be used even in areas where there is no electricity.
Mr Ikinu says his most challenging moment was waiting for three years to get a license. He is happy a licensing framework is now in place making it much easier for new entrants to enter the market.