Vodafone and Western Union to Partner on Money Transfers

Vodafone has joined forces with Western Union on an international mobile money transfer pilot; residents in the U.K. town of Reading will be able to send money to the mobile phones of relatives and friends in Kenya.

Money transfers has already become a success in Kenya via the M-PESA (”M” for “mobile” and “Pesa,” the Swahili word for “money”) system, which, for example, can be used by someone in an urban area to forward money to relatives in rural areas, and people in rural areas can pay off a loan in an urban area.

The service is marketed by Safaricom, in which Vodafone holds a stake, and there are currently around 4 million M-PESA customers, and that number is growing by approximately 200,000 users a month, according to Caroline Dewing, a spokeswoman at Vodafone.

“What we are doing is extending M-PESA internationally, and we are partnering with Western Union to do this, because they have such a huge foot print in terms of stores and knowledge in the space of international remittances,” Dewing said.

A person who wants to transfer money will be able to go into a Western Union store in Reading and say that they want to transfer some money to a Safaricom cell phone in Kenya. For the receiver in Kenya it will work just like any M-PESA transfer.

“They’ll get a text message saying you have been given X amount of money, and they can then choose how to store that: money on the phone, send it on to someone else or go to an M-PESA agent and cash it,” Dewing said.

Convenience and the ability to send smaller amounts for a low fee are the two major benefits compared to traditional money transfers. Sending up to £100 costs £4.90 (US$7.35), and £100 to £200 is £6.90, according to Dewing.

The trial will be conducted for three to four months. During those Vodafone will test all elements of the service and also see if the fee structure works, according to Dewing.

The goal is to roll it out between the U.K and Kenya, and then on to other markets within the near future, said Dewing, who declined to be more specific.

Using the mobile for either money transfers or as an electronic wallet is getting a lot of attention from the financial and telecom sectors.

Western Union is, for example, already working with Orascom Telecom, Globe Telecom and SMART Communications.

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