Why Tangaza is first telco to lose mobile money licence

Tangaza Mobile sim card

A SIM card belonging to Tangaza Mobile Ltd. 

Photo credit: File | Diana Ngila | Nation Media Group

What you need to know:

  • Tangaza now becomes the first mobile money company to have its licence revoked since advent of the technology in Kenya. 

The Central Bank of Kenya (CBK) has revoked the licence of mobile service provider Mobile Pay Limited (MPL), which operates under the Tangaza brand name.

The regulator cracked the whip over what it terms as ‘continued violations of the National Payment System (NPS) regulations.’

CBK said on Tuesday it that it has now taken over control of the business of the company, which is the smallest of the four mobile service providers in Kenya with a 0.01 percent market share.

“Pursuant to Regulation 10(5)(b), CBK has taken over control of the business of MPL to safeguard and facilitate distribution of the money in the Trust Fund,” the regulator said in a statement.

“This action culminates a long engagement between CBK and MPL, during which CBK has considered MPL’s continued violations of NPS law and regulations.” 

Tangaza now becomes the first mobile money company to have its licence revoked since the advent of the technology in Kenya. 

The company, which was Kenya’s first non-telecoms firm to enter the industry, started its operations in 2011. This now leaves three licenced players in the lucrative mobile money industry – Safaricom’s Mpesa, Airtel Money and Telkom’s T-Kash. 

CBK said the service provider has persistently failed to discharge its statutory obligations, including, among others, non-submission of audited annual financial accounts of the Trust Fund (Tangaza Trust) and MPL. 

CBK also accuses Mobile Pay of non-submission of annual systems security audit report and quarterly reports for its oversight.

“While MPL was granted sufficient time to address its violations, its compliance has continued to deteriorate, putting customer funds at risk,” CBK said in a statement. 

The market regulator said the conduct of the company and its trustees could erode public trust if it went unpunished. It said the revocation of its licence as a payments service provider will protect the interests of its customers and maintain confidence in the National Payment System.

It said it will undertake a reconciliation of the MPL customers’ balances against the Trust Fund accounts and then commence reimbursing the customers. It said the trustees of the company are personally liable for any shortfall in the Trust Fund.

It said the reconciliation is expected to be completed within two weeks.

Latest statistics from the Communications Authority of Kenya (CA) show that the total number of active registered mobile money subscriptions rose by 4.7 percent to stand at 34.7 million in the three months to June 2021. Similarly, the number of agents grew to 283,357 from 275,907 recorded during the previous quarter.