South African mobile phone operator MTN Group (MTNJ.J) has pulled the plug on its local mobile money business, citing low user uptake.

In a statement, the company said mobile money business was not viable in a country where about three quarters of the population already has a bank account.

"The operating costs of providing a mobile money platform has become prohibitive,” MTN said in a statement on Thursday.

Mobile money services that allow customers to transfer funds using their phones are popular in some other parts of Africa, especially in places where people have less access to traditional bank accounts.

MTN launched its South African service in 2012 following the success of Safaricom’s (SCOM.NR) M-Pesa in east Africa.

MTN, Africa’s biggest wireless phone group, now joins Vodacom (VODJ.J) in abandoning the service in South Africa.

Both Safaricom and Vodacom are controlled by Britain’s Vodafone (VOD.L).

However, MTN said its decision did not mean a complete exit from financial services.

"MTN is still committed to remaining a significant player in the financial services space and we are exploring opportunities in financial services space and other adjacent sectors,” the statement said.

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