HomeDigital Platforms & APIsSafaricom Kenya not letting M-Pesa go solo

    Safaricom Kenya not letting M-Pesa go solo


    Fintech supersedes voice as star money maker

    Safaricom Kenya is not following rival Airtel and spinning off its successful mobile money service M-Pesa Safaricom chairman Michael Joseph told the Kenyan Star. It’s now the telco’s star performer bringing in more profit than voice. But some critics says it’s got too big for the telco and needs space to grow. On Thursday, it was announced that customers of mobile network rivals Telkom and Airtel can now make direct mobile money payments to an M-PESA Pay Bill Number. The three telcos launched the interoperability for the pay-bill service on Friday. Will M-Pesa go it alone?

    Joseph said he has ‘yet to be convinced’ on the proposal that it should split the telco from the fintech side of the business. “At this time there is no change in our position,” said Joseph. Safaricom’s position comes as rival Airtel on Thursday announced that Airtel money services will now be provided by Airtel Money Kenya Limited in collaboration with the network of Airtel Networks, ‘the better to serve our customers’.

    There have been attempts to force Safaricom to split its business, which dominates both Kenya’s mobile money market and its wireless industry. In 2021 Kenyan Members of Parliament stifled a debate on a Bill that sought to compel all telecoms firms to split their voice and data business from their mobile money transfer and lending units. Currently, Safaricom controls about 65 per cent market share in voice, while its mobile money business has virtually no challenger. Rival Airtel holds a 17 per cent share, with Telkom Kenya on 14 per cent. 

    In the year ended March, M-Pesa made a profit of SH50 billion (Kenyan shillings, roughly €400 million) before tax, contributing nearly half of the Safaricom’s total gross earnings solidifying M-Pesa’s position as its most profitable service. This was the first time M-Pesa performance was listed separately in Safaricom’s profit, having previously just reported the contribution to revenues. Voice had long been Safaricom’s top revenue stream. But in the most recent figures M-Pesa contributed 49 per cent of the Safaricom’s Sh102.2 billion (€845 million) profit before tax and 36 per cent of the company’s total revenue of Sh298.07 billion (€2.46 billion). 

    Critics want M-Pesa and Safaricom’s mobile services to operate as two separate entities, with different boards, brands and regulators. If this is implemented, the Communications Authority of Kenya will regulate Safaricom’s mobile unit, while M-Pesa will be under the purview of the Central Bank of Kenya. Previously Joseph has mooted the idea that liberating M-Pesa from Safaricom would allow it to run a wider range of services under the platform, with lucrative high-value loans being one of the first opportunities it could be free to exploit.

    Compliance experts have said a split would level the playing field for the other financial services operators who don’t have access to their own mobile phone network. Safaricom’s market share in voice, data and mobile money is bigger than those of its rival, Airtel Kenya and Telkom, combined. Safaricom controls 60% for mobile subscriptions 68 per cent for data and up to 99 per cent for mobile money.

    M-Pesa has long been described as one of the greatest success stories of mobile money in the world, and its use became especially spread with the onset of the pandemic. However, three telcos announced the interoperability for the pay-bill service on Friday, report African Business Communities. Telkom and Airtel customers in Kenya can now make direct mobile money payments to an M-PESA Pay Bill Number. 

    The objective of the interoperability of Kenya’s mobile money service platforms is to allow Kenyans to make direct mobile money payments to any M-PESA merchant Pay Bill Number and Merchant Tills, from any network. The next phase towards complete merchant interoperability will see Kenyans make mobile money payments from M-PESA to the Till and Pay Bill Numbers of the other networks: Airtel Money and T-kash.

    This proposition is in line with the principles of the National Payments Strategy, 2022 – 2025, which was launched by the Central Bank of Kenya in February 2022 and seeks to achieve a secure, fast, efficient and collaborative payments system that supports financial inclusion and innovations that benefit Kenyans.

    Safaricom’s CEO, Peter Ndegwa said this makes M-PESA into a one-stop solution to send and receive money and payments from any financial service locally, and our global partners.

    “We are excited to be part of this change that seeks to provide Kenyans with an affordable, convenient and secure cashless payments platform that will provide more options that empower customers as they go about their day-to-day economic activity,” said Airtel Kenya’s CEO, Ashish Malhotra.