So MTN Money is not the only mobile-phone based money transfer service (mobile banking services not-withstanding), Zain Uganda also offers Zap, with marginally lower prices, and what seems to be slightly less restrictive than MTN Money – no 1M UGX limit on the balance to be held by the mobile service provider being the one thing that stands out, although the transaction limit still remains at 1M.
My main exposure to Zap is through advertising, prominently featuring a cross-section of the different populations in Uganda, from shopkeepers, to middle income urban young adults, to villagers dressed in traditional clothing. This particular brochure I’m looking at features a young man dressed in a polo shirt in a modern apartment using a smartphone to “Zap” money to an older women in a village dressed in traditional clothing, holding a basic nokia candybar phone.
Rumor has it, and the tv and billboard advertising go to support the rumor (“What can i do with Zap? … Pay for goods and services and so much more”), that Game and Shoprite – two large consumer stores in Kampala, both accept Zap in lieu of cash. Which, if the rumor is true, means that Zap has found an alternative to credit cards in a market where credit doesn’t work due to lack of addresses, lack of ability to track individuals, and lack of bank accounts to support the debit card intermediary step that has worked in the States. (One day I will go and verify this, but this isn’t my area of research, and I don’t live in Kampala, so bear with me. An astute reader living in Kampala is welcome to verify for me…)
Another interesting thing about Zap is that they’ve also deployed it in Tanzania and Kenya - and news reports say that they are working with Western Union to allow international money transfers. Which reminds me – locally in each country they partner with Standard Chartered, a prominent bank, which by my assessment tends to charge fairly high fees, but offers very good services, including online banking. People complain that if they don’t pay attention they quickly end up with a negative balance- but if you are employed, and direct deposit your salary, then it is often the bank of choice here. In Kenya, it seems they are partnering with both Standard Chartered and Citigroup (remember, this is a blog, so I have exactly one source for this information).
Some nitty gritty details:
Registration is in any of the authorized agents – Zain shops country-wide, who also can cash-in and cash-out Zap Money. To register, you need:
- A Zain SIM card
- Original and copy of an ID document, either a passport, voter registration card, recommendation from a village chairperson, employee id or a pension card
- Fill out an application form (so customer service may not always be perfect in africa, i haven’t tried this yet)
Zap also has a feature in which you can specify a “nick-name” in order to protect the privacy of your phone number – so you can give your nickname to the person with whom you are exchanging money instead of your phone number, and then you can change your nick-name afterwards. Every transaction must be confirmed by a password, and the sender and recipient each receives an SMS confirmation of the transaction. All the services are accessible from the phone menu directly, and if you forget your password you can call customer care to reset the password. Lost phones/SIM cards can be replaced without impact to the account.
Now for costs:
Zap M-Commerce Account Restrictions
- Max transfer amount: 1,000,000 UGX (~500USD)
- Max tx Buy Zap per day: 50
- Max tx Sell Zap per day: 50
- Zap to Zap Account Transfer (to Number or Nickname): 250 UGX
- Zap to TopUp Airtime: No Cost
- Zap Tools: Balance Check, Change Password, Change Nickname, etc: No Cost
Recommended Cash In& Cash Out Fees (Actual rates to be determined by supply and demand)
- Amount: Buy/Sell
- 1-5000: 250/250
- 5001-30,000: 200/1,000
- 30,001-60,000: 300/1,200
- 60,001-125,000: 400/1,600
- 125,001-250,000: 500/2,500
- 250,001-500,000: 1,000/3,000
- 500,001-1,000,000: 2,000/5,000
The interesting thing about this pricing model is that there is a fixed transfer fee of 250UGX per individual transfer, but the cash in and cash out fees are the primary transaction costs that are comparable to MTN money are only incurred when they choose to take money in and out – so Zap clients are actually encouraged to use this as a bank account, and to take out and put in money as a lump sum in increments of as high as they are able, especially given that there is no maximum balance of 1Million UGX, as there is with MTN Money.
What I think would be great is if Standard Chartered and Zain (and MTN) could start tracking individuals who are using this, and to give them a credit history based on their ability to maintain a balance successfully. Those who have a good credit rating might be eligible for loans through Standard Chartered or other banks.