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Cellphone number recycling is resulting in some South Africans losing access to their mobile money, and mobile operators have to reimburse these customers after deactivating their SIMs and allowing someone else to spend the funds.
The issue was highlighted by Itemate Solutions chief operating officer Robert van Breukelen in a recent interview with eNCA.
Mobile networks in South Africa are allocated ranges of cellphone numbers — formally referred to as MSISDNs — from the Independent Communications Authority of South Africa (Icasa).
To ensure their allocated numbers don’t run out, mobile networks deactivate SIM cards which have not been used over a certain period.
The MSISDN linked to a deactivated SIM can then be connected to another SIM sold to a new customer.
Van Breukelen said a deactivation usually occurs if there is no voice, SMS, or data traffic from the number after three months. Some operators offer a longer grace period, others less.
This would previously not have been an issue.
However, mobile networks are increasingly moving into the financial services space, and SIMs are used for more than just conventional network services.
“People are moving away from purely using their SIM cards for voice, data, and SMSs,” Van Breukelen said.
“Telcos haven’t kept up with this in terms of their number management and their number recycling.”
Van Breukelen explained that many people were now using multiple SIMs, with one being for their main number, while a secondary is used for a mobile money wallet — effectively a cellular bank account.
For example, someone might be a Vodacom customer and use its SIM for calls and data, but also have an MTN SIM for the MoMo service.
Unless that person made a call, sent an SMS, or used data on the secondary SIM in a three-month span, MTN could deactivate it — with money still in the mobile wallet.
“Their number becomes inactive, and the original customer can no longer access their mobile money account,” Van Breukelen said.
“That number is attached to a new SIM and sold to a new customer. That person puts it in their phone, and they’ve got a mobile money account with money in it.”
“Chances are they are going to spend it, and now you’ve got a disgruntled old customer coming to the telco wanting money.”
There are numerous other negative repercussions of recycling numbers with mobile money accounts — including the second customer using money from a loan taken out by the first customer.
Mobile money is popular in Sub-Saharan African countries with poor populations and less support for formal banking infrastructure.
Van Breukelen pointed out that some countries have regulations prohibiting recycling numbers linked to mobile money accounts for longer than three months.
In Malawi, for example, a mobile network can only recycle a number a year after there has been no activity on the mobile money account.
However, South Africans have access to a plethora of zero-fee and low-cost bank accounts, which means mobile money is not as popular as in many other African countries.
Possible software solutions and user-side actions
Nevertheless, Van Breukelen has proposed that the operators implement a software solution to help address the issue in South Africa.
Meanwhile, using or topping up a mobile money account at least once every three months should reflect activity on the network operator’s side — either via data traffic on an app or through USSD actions.
Vodacom offers mobile money services through its VodaPay app, while MTN provides its MoMo service.
These allow mobile subscribers to load money into a wallet that uses their cellphone number as the primary identifier rather than a bank account.
Despite being less popular in South Africa, MTN has nine million local subscribers on MoMo — including those who actively use their SIMs for more conventional services.
It recently launched a swathe of new features for MoMo, including a Business Wallet, card payments with cashback rewards, and international remittances that allow sending money across 12 African countries.
A few months prior, Vodacom also improved its VodaPay app with the ability to add money to its in-app wallet with cash deposits and send money to another phone number.
While it is unknown how many people have money in their VodaPay wallets, the VodaPay app has amassed over 3.3 million registrations.
Now read: Vodacom fined R1 million over “unethical” contract cancellations
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