10 Years On, The Past, Present & Future of Safaricom’s M-Pesa In Kenya

Is It 10 Years Already?

Its hard to imagine that its been 10 years already since Safaricom’s mobile money offering, M-Pesa, took root in Kenya. I can recall quite vividly when this happened back then and how transformational it was. Indeed, I recall that one of the first reasons I started using M-Pesa was to send money to my mother. At the time, she had a bank account where I would normally deposit money for her but the caveat is that the nearest branch and ATM required her to travel a distance of around 20 kilometers? It was actually her who prompted me that there was an M-Pesa agent just a short distance from where she lived at the time and she preferred to receive money via M-Pesa instead of the bank. This was big deal since my mother was not really a technophile and for her to opt for M-Pesa it was quite telling how sorely needed such a service was in Kenya.

Kenyans Have ‘Peculiar’ Habits

As Michael Joesph, the former CEO of Safaricom once noted, ‘Kenyans have peculiar calling habits’, a quip which got him into trouble with many Kenyans at the time who saw the remark as being offensive. In hindsight, Michael Jospeh got it spot on since Kenyans are indeed peculiar when it comes to all the myriad of ways that we use mobile technologies. Indeed, its a well-known fact that thanks to M-Pesa, Kenya is the world’s leader when it comes to mobile money adoption, The numbers do not lie:

  • 24 million registered M-Pesa users in Kenya (thats around half the Kenyan population!)
  • 16.6 million monthly active users on M-Pesa in Kenya
  • 100,744 M-Pesa agents in Kenya
  • 25% of all M-Pesa transactions in Kenya are person-to-person or P2P
  • US$ 13 Billion in M-Pesa transactions during 2016
  • Safaricom’s ‘Lipa Na M-Pesa’ offering has 43,603 active merchants and did Kes. 20.2 billion in transactions  (March 2016)
  • International Money Transfers via M-Pesa grew to Kes. 13.1 Billion in 2016
  • CBA Bank’s M-Shwari M-Pesa Loans offering with Safaricom has over 10 million customers

M-Pesa Is Everywhere

I am not sure how accurate this is but someone recently told me that M-Pesa in Kenya accounts for 9 in 10 mobile money transactions globally? Its mind blowing of this is indeed the case! It goes without saying that M-Pesa is essentially woven into the very fabric that makes up the modern Kenyan lifestyle, across the board, and its demographics. M-Pesa is used for paying for essential products and services like food at the local kiosk as well as utility bills like Kenya Power and Nairobi Water. I personally cannot recall the last time I stood in line to pay for anything if there was an M-Pesa payment alternative. In fact, the few times I do stand in a line is when I go to the bank. Kenya is one of the few global markets where you can pay for an Uber using M-Pesa – that is how significant its uptake is in Kenya.

We rarely use cash these days in Kenya where M-Pesa is available and this is evidenced by the scenarios where merchants quite often prefer M-Pesa since its less prone to fraud and it provides a streamlined way of managing their own finances. However, M-Pesa itself is not standing still and is rapidly evolving. Last year Safaricom launched a mobile app and the same has gone through several iterations so that it now streamlines the whole M-Pesa experience. At the same time, Its now possible to get detailed M-Pesa statements for free as a user in Kenya so that you can track all your M-Pesa transactions. I pulled one of mine recently and was shocked at how many of my financial transactions happen via M-Pesa. So, here’s the thing, before M-Pesa, many Kenyans were excluded from financial transactions and M-Pesa has made it possible for everyone including those at the bottom of the pyramid to access financial services.

The Evolution of M-Pesa

Going forward, it seems to me that Safaricom’s M-Pesa has an unassailable lead when it comes to financial transactions via the mobile channel in Kenya. Even as Kenya’s banks have banded together and now offer PesaLink as an alternative to M-Pesa, the caveat is that you still need a bank account to use these services which excludes a big portion of the unbanked Kenyan population who almost certainly have a mobile phone and M-Pesa. One of the best things about M-Pesa is the fact that the service works on even the most entry-level of mobile devices, rather than requiring a smartphone and a mobile app. One thing is apparent though, as Safaricom’s many competitors scramble to catch-up with M-Pesa in the mobile money space, Safaricom is already consolidating its gains in the merchant space since M-Pesa is essentially the operating system for mobile money in Kenya when it comes to consumer-based transactions.

Since 90% of all financial transactions in Kenya are still cash-based, the future is undoubtedly a cashless one. At the very forefront of this global trend in Kenya is M-Pesa and one can see that the M-Pesa ecosystem needs to evolve into more ambitious use cases. In particular, since M-Pesa already defines mobile money for P2P transactions, the next big frontier is that of taking over a vast majority of merchant-based transactions. Already, M-Pesa has an Application Programming Interface or API meaning it is now relatively easy to integrate it with mainstream financial transactions, take a step further, M-Pesa must transcend the mobile device itself and become even more ubiquitous if it is to be even more successful.

Safaricom’s M-Pesa One Tap Offering

Safaricom’s One Tap offering as launched last month is one of the ways in which the M-Pesa ecosystem can become truly ubiquitous in Kenya when it comes to merchant-based transactions. One Tap is an NFC-based ‘tap and go’ payment solution that is available using cards, wrist bands and an NFC badge. M-Pesa One Tap is currently being run on pilot in Nakuru and the idea is that it will be gradually rolled out nationwide with merchants. The reality is that some ways M-Pesa is still a little clunky to use so One Tap aims to streamline the merchant and customer experience, as well as take the M-Pesa to the smallest merchants out there.

The way Safaricom’s M-Pesa One Tap works is that as a customer you tap your card, wrist band or sticker on a mobile POS with a registered merchant. The mobile POS is not conventional like the typical ones that run credit cards as they are small and can even be placed around the neck while the merchant walks on the street. More specifically, if you have an NFC enabled phone you just tap it and type in your M-Pssa PIN to make a payment. The same thing applies to using the M-Pesa One Tap NFC sticker on the back of your phone (if your phone is not NFC capable) and then tapping the POS and entering your PIN to pay. Lastly, there is also a debit card that is being rolled our that is connected to your M-Pesa account and you can tap the card on the POS and enter your M-Pesa PIN to make a payment.

I am really curious to see if Safaricom’s M-Pesa One Tap will actually succeed since its a step change in M-Pesa has worked to-date between merchants and consumers. I know for a fact that its often awkward to be at the supermarket till paying with M-Pesa has you have to initiate the transaction manually and it can be prone to unintended mistakes? By making transactions with merchants somewhat as seamless as paying with credit or debit cards, or even with cash, Safaricom’s M-Pesa One Tap has the potential to usher in yet another massive step change in how financial transactions worked in Kenya a decade ago. It seems to me that all things considered, Safaricom and M-Pesa still have lots of momentum to keep disrupting Kenya’s financial services sector.


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