Mama Money wants to slash cash transfer costs

Mama Money‚ based in Cape Town and launched last week, said it wanted to compete with the big money transfer operators such as Western Union and Moneygram.

Mama Money differs from the traditional money transfer operators that run predominately cash-to-cash models‚ which tend to be expensive‚ slow and antiquated.

The company offers a cashless system where customers have to pay in South Africa via a bank account. Mama Money then pays out in the receiving countries using mobile money.

Mama Money said its rates were set at a no-hidden fee of 5%‚ with no margin charged on the exchange rate.

South Africa is one of the most expensive countries from which to send low-value remittances‚ specifically to its neighbouring countries in Southern Africa.

The World Bank said that an average rate of 18.69% was charged to send the equivalent of $200 (R2300) from South Africa to neighbouring Southern African Development Community countries. The global remittance price average is 8.9%.

The World Bank said last year that rates of up to 29% were still being charged on money transfers between some countries‚ despite assurances by the Group of 8 at the L'Aquila Summit in 2009 to halve the world's mean remittance fee to 5%.

The World Bank said such a drop in fees would save poorer countries as much as $16-billion (R185-billion) a year.

Remittances generate three times more money every year than the total global aid budget‚ the World Bank said.

Mama Money co-founder Mathieu Coquillon said yesterday the company was aiming to help to reduce the cost of sending remittances.

"We hope to disrupt the market so that all the other players reduce their rates and modernise their systems.

"If everybody in two or three years drops their prices‚ then we have achieved what we set out to do.

"We are comfortable with 5%. It is a socially fair price."

Coquillon said customers had to complete a one-off registration with one of the company's agents‚ who would capture basic information in order to comply with the Financial Intelligence Centre Act.

"It's an online business‚ so there are no branches. All customers need to do is log on to the website using their cellphone number‚ add a recipient and their mobile number [the person they are sending the money to in Zimbabwe]. Recipients will get the money in US dollars."

He said during its first phase of operating‚ Mama Money would focus on Zimbabweans living and working in South Africa and then expand to incorporate other nationals.

Recent analysis by global growth consulting firm Frost & Sullivan found that the mobile money market earned revenues of about $655.8-million (R7.58- billion) last year.

Source: Herald - BDlive via I-Net Bridge