Johannesburg - Mobile network Vodacom South Africa [JSE:VOD] has moved to shut down its sluggish mobile money transfer service M-Pesa.

M-Pesa enables customers - particularly unbanked users - to transfer money from person-to-person using mobile phone and text-messaging technology.

In 2010, Vodacom launched M-Pesa in South Africa and the company set a target of reaching 10 million local users.

But only 76 000 people were actively using the service last year, according to Vodacom’s 2015 integrated report.

Subsequently, Fin24 reported in March 2016 that Vodacom was reviewing the service and on Monday the company has confirmed that it will discontinue the product from June 30 2016.

“Vodacom’s decision is based on the fact that the business sustainability of M-Pesa is predicated on achieving a critical mass of users,” said Shameel Joosub, Vodacom’s chief executive officer.

“Based on our revised projections and high levels of financial inclusion in South Africa there is little prospect of the M-Pesa product achieving this in its current format in the mid-term,” said Joosub in a statement.

Joosub further said that “Vodacom is fully committed to mitigating any inconvenience to customers” and that “their funds remain safe and readily accessible”.

“We remain of the opinion that opportunities exist in the Financial Services environment and we will continue to explore these,” said Joosub.