58
Porteous
Box 2.2
The Growth of Mobile Data-Enabled Social Network Platforms: Mxit in South Africa While SMS (the 2G message-exchange standard for the global system for mobile communications, or GSM) has attracted much attention, other forms of text-based communication via a mobile phone have also grown rapidly. At the forefront of this non-SMS revolution is the South African company Mxit. Originally an acronym for “Message Exchange,” Mxit is a mobile social networking site that allows its customers to send messages of up to 2,000 characters. The service connects users via GPRS/3G, which allows users to message at a significantly lower cost than that of SMS. The low cost and versatility of the system have led to an explosive growth in clients, especially among teenagers and young adults. Started in 2005, by 2010 the company had 20 million registered users worldwide. A more recent feature of Mxit is its mobile money service. “Mxit Moola” is a virtual currency that can be bought on the Mxit website and then used to purchase a variety of goods and services. Via partnerships with two large South African banks, Mxit users can purchase Mxit Moola without the need for a credit card or bank account. Rather, customers buy Mxit Moola vouchers to fund their accounts from either street-level vendors or self-service kiosks; “funds” from the account are then used to purchase airtime or entertainment products, such as music, games, and books. While the system is currently offered only in South Africa, Mxit has indicated that it plans to introduce the service into 26 countries worldwide. Mxit’s push into the payment space has been motivated by several factors. Many of its users are teenagers and young adults who do not have access to a bank account. To cater to these users’ needs, and to increase the Mxit platform’s utility, the company needed to create a value-transfer system that did not require a credit card or a bank account. This tool, in turn, increased the product’s attractiveness to other potential consumers, growing the service into areas where Internet-based social networking sites do not (yet) compete. Finally, Mxit claims a competitive pricing advantage because of its delivery of service via GPRS/3G. The company has indicated that its low data costs—a fraction of that paid for traditional SMS service—allow it to deliver mobile-money options to consumers at a fraction of the cost of other mobile money services. Mxit’s status as a provider of social networking, entertainment, and emerging financial services makes it an intriguing example of rising African mobile commerce firms of the third generation. Sources: http://site.mxit.com/; author.