A new money transfer company, MapSwitch Uganda, has launched infrastructure that will enable millions of Ugandans to access low-cost banking services.

The money transfer network involves a financial institution, three mobile phone operators and several hundred points of presence across the country.

The new venture will see Telecom operator Uganda Telecom Ltd partner with MapSwitch, while two mobile companies will come on board later, officials told The EastAfrican recently.

Initially, MapSwitch will operate automated teller machines and debit card swipe devices, in addition to 26 biometric identification machines that will register customers.

The MapSwitch infrastructure includes ATMs, mobile phones and point-of-sale terminals.

The company is a subsidiary of Map International, headquartered in New York, and is eying at least 200,000 government employees as well as the unbanked rural and urban population.

In a population of 30 million, only five per cent — including those accommodated within the microfinance segment of the market — currently have access to banking services.

MapSwitch chairman Michael Landau said the multimillion dollar investment has been at pilot stage for two years, building strategic partnerships and developing facilities that will be used to transact at any Post Bank branch and with other agents across the country.

“We have a robust business model and we have entered into partnership with key players,” said Mr Landau.

Besides Post Bank, airtime distributor X-Tel, a key vendor of Uganda Telecom products, is the other partner.

“Several ATMs have been deployed and are fully functional. Nine others are expected to be functional before the end of 2008. It is expected that over 200 point-of-sale terminals will be rolled out at merchant outlets by the end of January 2009,” said Mr Landau.

Although the business requires heavy investment in state-of-the-art technology, Mr Landau says his company can start to recoup its investment between the first 12 and 18 months.

Since 2006, MapSwitch, along with Post Bank, has engaged the banking industry regulator to agree to the business model as the central bank pressed for safety measures to guarantee customers’ money.

Central to these measures is the biometric debit card, which is provided to Post Bank customers seeking to open bank accounts.

So far, the company has issued 20,000 debit ID cards, equipped with biometric technology for easy customer identification, secure capture and storing of customer details.

Money transfer has been a niche market in the financial services sector, dominated by mainly Western Union and MoneyGram, through outlets in major locations across the country.

However, telecom operators have in the past few weeks been preparing to start offering this service to take advantage of their network penetration and the convenience of the mobile phone as a business tool.

Zain Uganda came out of the blocks in October to announce the service on its seamless network; MTN is expected to launch soon.

Meanwhile, MapSwitch, while partnering with Uganda Telecom, to get its money transfer services off the ground, has reportedly already held discussions with both Zain and Warid Telecom.

This means customers who cannot transact at Post Bank branches countrywide can do so using their mobile phones.

In addition to the 200 points-of-sale, several ATMs and Post Bank branches, linking up with the three mobile phone companies will enable several millions of people to access banking services, as the mobile operators have a combined subscriber base of 4.2 million customers — a number equivalent to the number of customers currently enrolled with Kenyan telecom giant Safaricom’s M-Pesa mobile money transfer service dubbed M-Pesa.

The difference with the MapSwitch model is that it deploys a multi-platform technology of mobile, ATM and point-of-sale service.

In case of mobile network interruptions, rural traders and local savings and credit cooperatives can still transact with their customers at a point of sale station, utilising their debit cards with GSM-based mobile data devices, while small local entrepreneurs can make business to business payments using an ATM facility, according to MapSwitch managing director Roscoe Nsubuga.

Through mobile banking and the ATM network, customers can also make purchases and effect electronic financial transactions such as bill payments, mobile phone airtime purchases and repayments, significantly reducing operational costs.