Driving to Wolftrap this past Friday, a story on NPR’s Marketplace prompted me to turn up the volume – the national business media was covering WIZZIT, a South African cell phone banking firm that NextBillion has covered extensively in the past. For the uninitiated, WIZZIT is a 1-year-old start-up changing the face of South African banking. Their low-cost cell phone debit service, which comes with a funky Maestro debit card, has quickly developed what the Mail and Guardian calls a “cult status” in poor townships. Marketplace’s Gretchen Wilson describes how it works:

“[A customer] can make deposits at a bank or at any post office. They scan his debit card, take the cash, and then immediately credit his account. He gets a text message to prove it. Then he uses commands on his cell phone to check his balance, transfer money - even pay his electricity bill. He uses his debit card to buy things or to withdraw cash.”

According to WIZZIT CEO Brian Richardson, there are 16 million unbanked people in South Africa – a challenge to development, sure, but also a potentially huge untapped market. WIZZIT isn’t the only firm to recognize the latent potential of the BOP financial services market: banking majors Standard and FSB, as well as cell phone giant MTN, actively vie for BOP customers.

What seems to set WIZZIT apart from its competition is a combination of low fees (there are no minimum balances and per-transfer charges are cheap) and excellent customer service. Since we posted the WIZZIT activity capsule in January, customers have come to NextBillion to rave about their service:

“I phoned your service centre today [and] I was bowled over by the exceptional and friendly service; hope more companies will learn from you.” – Paddy

“[WIZZIT’s] service was unreal and so I gave the product a try. I can pay all my bills at extremely low costs! I can transfer money to anyone in the world! This product changed my perceptions of banking.” – Roger

The business model makes sense – Marketplace reports that 35 percent of the 16 million unbanked (5.6 million people) own their own cell phone. Critics might argue that poor people are ill-suited to use debit cards, and having credit might bury some in debt. Economists tell a different story: better access to phones spurs economic growth, while access to financial services unlocks “dead capital.”

There are, of course, issues. Adding customers is difficult in a highly-competitive environment, and there's no guarantee that each customer will complete enough transactions for WIZZIT to break-even. Furthermore, CGAP documents a myriad of barriers preventing BOP customers from getting cash into the electronic system.

Despite these challenges, hearing WIZZIT on the radio was music to my ears – it proves that entrepreneurs can succeed by targeting the BOP market. Marketplace has the full text as well as the audio online – check it out. As for the concert that evening, all I’ll say is that Motown is alive and kicking in Washington.