South African mobile phone operator, MTN Group, on Thursday scrapped its local mobile money business due to its high operating cost.
MTN said, in a statement in Johannesburg, that the business was no longer viable in a country where around three quarters of the population already had a bank account.
“The operating costs of providing a mobile money platform has become prohibitive,” MTN said.
MTN said its decision did not mean a complete exit from financial services.
“MTN is still committed to remaining a significant player in the financial services space and we are exploring opportunities in financial services space and other adjacent sectors,” it said.
MTN launched its South African service in 2012 after the success of Safaricom’s M-Pesa in East Africa convinced some executives the service was the industry’s next growth area.
However MTN, Africa’s biggest wireless phone group, now joins Vodacom in abandoning the service in South Africa.
Both Safaricom and Vodacom are controlled by Britain’s Vodafone.
Mobile money services that allow customers to transfer funds using their phones have proved hugely popular in some other parts of Africa, particularly where people have less access to traditional bank accounts.