How kadogo economy is informing firm marriages

The scramble for cashless money transfer billions is on the cut-throat stretch with banks and Mobile Virtual Network Operators (MVNO) adopting interoperability to enhance usage across all income groups.

The aim is to reach Wanjiku in whatever nook and cranny she may be as the realisation that the kadogo economy holds great potential hits home.

While banks and mobile companies each remain bitter rivals on the commercial front, the need to wade through the fiercely fought battle for the kadogo economy has ensured local money transfer firms remain in the marriage of interoperability as a matter of convenience.

Recently, Pesalink’s Chief Executive Officer Agnes Gathaiya told a Kenya Bankers Association (KBA) Kaa Chonjo meet that they were looking at ways to simplify their platform, which is to be expanded to general use in retail stores, petrol stations and restaurants among others.

“Kenyans want a simpler platform to settle bills for goods, food eaten at a restaurant, fuel at a petrol station or for services received. We are working on a system that makes Pesalink a must-have product for all bank account holders,” she said.

While Pesalink’s initial phase involved person-to-person transfers, the second phase will include business to business transfers, linkages with government agencies for payment of rates and licences, mobile virtual network operators and other players in the mobile money transfer subsector.

More choices

Pundits feel while interoperability could open up more choices for mobile phone services as a package (voice, text, internet and mobile money), it is yet to fully blossom across all income groups due to rigidity of MVNOs and varying transaction charges by banks using the Pesalink platform.

Researchers say unpredictability or lack of uniform money transfer tariffs for bank to bank transfers has adversely affected Pesalink’s penetration, which continues to play right into MVNOs hands whose tariffs are publicly known by both the sender and receiver.

The Kaa Chonjo campaign heard that use of cash remains king at 90 per cent as Kenyans prefer a one-off frills-free transaction as opposed to card and mobile payments that involves PINs as well as availability of facilities and mobile phones to effect transactions.

“Use of mobile pay platforms, especially M-Pesa is rising fast but cash remains king where upto 90 per cent still use cash.

While we also promote and prefer cashless payments due to security, Kenyans are still hooked to cash that is burdensome, costly and a security-threat,” said Retail Traders Association of Kenya (Retrak) Chief executive Wambui Mbarire.

New angle

But the race could take a new angle if the Kaa Chonjo campaigns boosts Kenyans’ confidence in use of cashless platforms by banks from cards, bank apps to Pesalink where bank customers will be assured of safety of all transactions as well as privacy of their account details and activities.

Ms Gathaiya said they were targeting to reclaim their turf taken away by MVNOs via use of Pesalink’s 47 member base where participating businesses will see transactions settled on a bank (client) to bank (merchant) arrangement.

According to Consultative Group to Assist the Poor (CGAP) Inclusive Markets Member William Cook, banks and MVNOs could do well to provide a cheaper but seamless customer-interface while operating a back office clearing house to settle transfers realtime.

While he welcomed MVNOs’ interoperability plans introduced last month, Mr Cook said very little will be achieved as the present arrangement remains largely complicated where users must memorise codes for use in the USSD service.