South Africa's largest mobile phone group Vodacom is teaming up with Nedbank to deliver a phone-based cash transfer service, similar to a successful service operating in Kenya.

The product known as M-Pesa will initially allow users without access to bank accounts to transfer money using their mobile phones and eventually pay bills and buy goods.

The service was developed by Britain's Vodafone, the majority shareholder in Vodacom, and part owner of Kenya's Safaricom.

Safaricom, Kenya's largest mobile provider, started its M-Pesa service in March 2007. About 10 million people use the service.

"In South Africa, cellphone penetration is extremely high, and yet it is estimated that more than 13 million economically active South Africans do not have a bank account," Mike Brown, Nedbanks' chief executive said.

Only one in five African households in Africa had access to a bank account, according to the United Nations, but a much higher proportion have a mobile phone.

Telecoms trade body GSMA has predicted that operators could make billion from financial services by "banking" 364 million people without bank accounts by 2012.

Money transfer has also been successful in Uganda. In May MTN Uganda, a unit of MTN said it expects users of mobile money services to grow by three-quarters by 2011. It had registered 890,000 mobile money users and said it expects more than 2 million users of its mobile money services by the end of the year and 3.5 million users by 2012.

MTN has already launched MobileMoney in South Africa, Rwanda, Cote d'ivoire, Benin and Yemen. Vodafone also offers M-Pesa mobile money in Afghanistan and Tanzania, while Bharti Airtel has Zap mobile cash transfer service in Kenya and Tanzania launched by Zain.

Sourced by SA – The Good News via Reuters