Vodafone launched a money transfer trial this week between the UK and Kenya. The move marks the operator’s biggest step yet into the international money transfer market, estimated to be worth half a trillion dollars per year.
Vodafone has partnered with Western Union, an established player in the money transfer business, and has been in discussions with the financial services authority (FSA) to secure clearance for its new business.
The money transfer business, called M-Pesa, allows migrant workers to send money to their families using a similar system to topping up a prepay handset. The charges are considerably lower than conventional money transfers.
The operator is charging customers a £6.90 fee for a money transfer of between £100 and £200, and £4.90 for amounts under £100. Fees for a conventional money transfer through Western Union are over £12.
A spokeswoman said Vodafone is not targeting large value transactions, adding: ‘Our belief is that it will be smaller amounts sent regularly.’
The trial is based on the Kenyan community in Reading, Berkshire, that sends money to families in their home country.
The collaboration between Vodafone and Western Union appears to be built on the latter’s strong network of agents in areas of the UK with high concentrations of migrant workers, and Vodafone’s large footprint in Kenya (it has an 80% share of the Kenyan telecoms market).
There are a minority of people in Kenya with bank accounts but there are over 10 million people in the country that own a mobile phone.
Vodafone expects to extend the business to span the whole of the UK, as well as to other countries where it has a presence, particularly India and Turkey.
Migrant workers represent 2% of the UK workforce with the vast majority sending varying amounts of money back to families in other countries. Official figures claimed earlier this year that migrant workers contribute between £2bn and £5bn to the UK economy.
Vodafone’s M-pesa business has been running for almost two years within Kenya where workers in the capital, Nairobi, typically send money to families in smaller towns and villages in Kenya.