Nation Media Group (NMG) has shut down Nation Hela, its international money transfer unit launched five years ago to profit from the growing diaspora remittances from Kenyans living abroad.
The service has been struggling to get the critical numbers needed to make it profitable since its launch in August 2012, with competition from international money services like MoneyGram, Western Union and mobile transfers finally pulverizing it.
A circular from Diamond Trust Bank (DTB), the holding bank, to accountholders last week indicated that the Nation Hela card services will be discontinued at on 31st May 2017.
The biggest beneficiary of this product failure will be Nakumatt supermarkets, which will inherit all the Nation Hela customers. “Any cash balance will be credited to your Nakumatt Global card as from 24/4/2017,” DTB said in the communication. This will force Nation Hela cardholders to sign up for the Nakumatt card.
While this was not a fully banking service, it was the first attempt by a media house in Kenya to develop a financial product to use its existing platforms for commerce.
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The media house had partnered with its sister company, Diamond Trust Bank (DTB), in the launch of a Visa pre-paid card known branded as Nation Hela, which targeted Kenyans sending money home.
Nation Hela users would send money online, directly from a Paypal account, debit or credit card into the Nation Hela account. Diamond Trust Bank was handling the back-office side of the business.
The service, approved by the Central Bank of Kenya, had a seven-month pilot phase and is linked to mobile networks. The card, selling at Sh500, also allowed users to top up from credit and debit cards and Paypal.
The card was launched at a time when diaspora inflows were on the rise, having grown by over 40 per cent in 2011 to Sh75 billion from about Ksh53 billion sent in 2010. Now the remittances have more than tripled to Ksh177.34 billion.
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The card was also 30 per cent cheaper than existing platforms and hoped to use this low-cost to attract more clients most of whom were using Western Union and MoneyGram.
The end of Nation Hela marks another spectacular product failure by the leading media house. In the past 10 or so years, the company has launched two newspapers Daily Metro and Nairobi News – which it closed down after they failed to make money. Last year, it closed Qtv and two radio stations.
Analysts say Nation Media is better off now focusing on its core business of selling news through print, digital and broadcast.