How mobile payments tweak the stage for M-Pesa to take aim at tech giants

When Safaricom launched M-Pesa Global in November 2018, it laid the ground for the worldwide uptake of its mobile money solution while announcing to the world that Kenya had the capacity to compete on the global tech landscape.

Integrating its payment system to global players such as Western Union, World Remit, HomeSend, the new product allowed Kenyans in the diaspora to send money back home with ease, a service that did not exist before.

More than 500,000 Western Union agents helped kick-start the project, as the company made Kenya achieve another first in enabling sending and receiving of money between mobile phones and virtually any individual across the world.

Capitalising on its Big Data platform, East Africa’s most profitable company went ahead to enable PayPal integration that now allows customers to deposit funds from M-Pesa to the American payments system, as well as withdrawing from PayPal to M-Pesa.

In the first month after its announcement, users could only use the service to transact in the East African trade bloc, United Arab Emirates, the United Kingdom and Germany.

However, anyone could send money to all Western Union agents in the world except sanctioned nations such as North Korea and Syria.

Kenyans using Safaricom are now able to send and receive money from 167 countries compared to 67 last year.

“This new service brings the convenience, safety and speed of M-Pesa to the rest of the world and will enable Kenyans to send and receive money across the world from the comfort of their mobile phones. M-Pesa Global seeks to connect Kenyans to opportunities by making it easy and seamless for them to transact with the world and for the world to transact with Kenyans,” said Sitoyo Lopokoiyit, Safaricom Chief Financial Services Officer.

Since its launch in March 2007, M-Pesa has risen to become the telco’s main driver of revenue growth, further accelerating displacement of traditional voice and messaging services.

Thomas Muindi, who has used the service to send money home from the UAE, says it has been a convenient product.

“I use PayPal to send money to my family for business support. Initially, it used to take two hours for them to withdraw the money from M-Pesa. Now it only takes a few seconds,” he told this writer.

According to the Safaricom Sustainability Business Report 2020, which covers the period between April 1, 2019, and March 31, 2020, M-Pesa Global registered a 12.1 per cent growth in the period where M-Pesa transactional value topped Sh13.9 trillion after registering a growth of 18.4 per cent during the period.

It now controls half of the money Kenyans working abroad send home through its M-Pesa Global, which cumulatively amounted to Sh284 billion over the same period.

The social value of M-Pesa remains a significant creator of value.

Last year, M-Pesa Global accounted for 37.3 per cent or Sh101 billion of all diaspora remittances moved through the mobile wallet.

“The social value of M-Pesa remains a significant creator of value for the Kenyan society, increasing by 10 per cent in the last financial year. The major drivers of this growth have been the increase in numbers of customers, agents and merchants; the increase in the average number of transactions per customer; and the increase in the average value of transactions made per customer,” the report indicates.

The platform, which had 180,000 subscribers last now boats of 744,000 users, rising fourfold in 12 months and underscoring the product’s potential in the global stage.

Active M-Pesa base rose by 10 per cent to stand at 24.9 million over the year in review.

In the mobile money industry in the country, M-Pesa continues to dominate its competitors due to its early market entrance and acceptance.

Data from the Communications Authority shows that M-Pesa is the most popular mobile money service, with a market share of 98.9 per cent. That leaves only 1.1 per cent for Airtel Money and T-Kash to share.

The value of mobile money transactions stood at Sh2.83 trillion in 2019.