Vodafone's Fakka overcomes coin shortage, creates new market segment

Mobile operator Vodafone has licked the problem of coin shortage and opened a business opportunity  for itself in a most innovative way.

One has often faced the problem of a shortage of small change in India – whether at a toll point, when buying vegetables, or shopping for small-value items – like it or lump it, we have become accustomed to being handed, say, an extra tomato or a toffee in lieu of change.

We are not alone with this problem – but in Egypt, Vodafone has cleverly succeeded in turning the problem into an opportunity.

In Egypt too, small businesses face the problem of returning small change. ?Vodafone Egypt decided to use this as an opportunity to increase the number of distribution points for selling recharge cards to its prepaid users, as well as increasing its revenue, by offering small recharges.

It decided to launch a 'Micro Recharge Card' in various small denominations and christened it 'Fakka', or 'small change' in local parlance, and distributed this extensively in mom and pop stores.

Now when such a shopkeeper faces a shortage of change she confidently dispenses Vodafone's Fakka card of equivalent denomination.

Customers have taken to it happily. To make sure that they did not face resistance from small shopkeepers for stocking it, Fakkas were designed to fit into the compartment of the cash register originally meant for keeping small change.

Vodafone Fakka micro recharge cards have acquired the status of a new currency in Egypt with little shops across the country stocking them cards to use as change, giving Vodafone Egypt the biggest distribution channel possible.

Vodafone's Micro Recharge Card is a win-win for all three stakeholders: shopkeepers, customers and Vodafone.

Before one jumps to asking why this model can't be replicated in India, it should be remembered that the telecoms market here is among the most fragmented in the world, and Vodafone is not the market leader. But perhaps the competitors could put aside their rivalry and combine for a similar scheme, which would be a winner for all considering that small recharges of as little as Rs10 are very popular in the market.