Barclays expands ‘Pingit’ to Africa

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Barclays is underlining its commitment to retail banking in Africa with the launch of an international version of its mobile phone payments system in Kenya.

The move will allow British people sending money to Africa to do so using just the recipient’s mobile phone number. It is an extension of the ‘Pingit’ mobile-to-mobile payments service Barclays launched in the UK earlier this year, writes Sharlene Goff.

Barclays derives about 6% of its pre-tax profit from the African retail market, and Bob Diamond, former chief executive, had highlighted the region as an area for growth.

However, analysts have raised questions over whether the recent departure of Mr Diamond following revelations about Barclays’ involvement in the Libor scandal could prompt a rethink of the bank’s African strategy.

Antony Jenkins, head of the retail business, told the FT that Barclays was keen to tap into the ‘corridors of African expatriates’ who are living in the UK but regularly send money back to their families. He estimated there were about 200,000 people living in the UK who were born in Kenya.

Barclays plans to launch the mobile-to-mobile service in Kenya this week and expand it to a number of other African countries, including South Africa, later this year. It expects to make the service available in its European markets – Spain, Italy, Portugal and France – in 2013.

The bank estimates the service, which will be available to customers and non-customers, will reduce the cost of sending money to Africa by at least half. Barclays will charge a commission on the currency exchange but no fee. It expects a £100 transfer to Africa to cost less than £3. Traditional money transfer providers typically charge both a fee and a spread on currency, which could mean a £5-£10 charge on a £100 transfer.

Barclays’ move comes as UK banks are under pressure to seek out new revenue streams following criticism over their opaque charging structures and big compensation payouts from consumer mis-selling scandals.

Traditional banks are also fending off competition from other companies, such as Google and PayPal and retailers such as Walmart, which are starting to offer their own mobile payments services.

The Barclays Pingit service, which has been downloaded by 1 million users since its February launch, provides a way to target new customers. Jenkins said 15-20% of users held their accounts elsewhere.

Barclays operates in about 10 countries in Africa and also owns a majority stake in Absa, one of South Africa’s biggest banks. Profits from the region fell sharply in the first half of the year following a jump in credit impairments on South African mortgages and adverse currency movements.