Businesses tap mobile money transfer as financial access deepens

What initially started in Kenya in 2007 as a money transfer service from person to person is gradually becoming a mode of making payment between businesses.

The latest report from the banking industry regulator shows that the financiers and utility companies have increased use of the services.

The uptake is mainly because the banking institutions have integrated their platforms with mobile money transfer services such as M-Pesa, Airtel money, Yucash and Orange money that enable their clients to access their accounts through their phones.

The banks are also using the integrated platform to offer banking agency across the country, with financiers such as KCB using KCB bank connect and family Pesa-pap to reach their clients.

Statistics from the Central Bank of Kenya (CBK) indicates that the number of customers using the service rose to over 19.2 million while the industry transferred Sh118.4 billion, with 41.42 transactions in the last month of the year.

Person to person transactions were valued at Sh63.87 billion, accounting for 58 per cent of what the industry transferred.

Transactions between businesses and individuals were valued at Sh54.53 billion, accounting for 42 per cent of industry transfers in December.

Central Bank of Kenya Governor Njuguna Ndung’u said mobile money transfers appeals to all groups of people and the cost of mobile financial services has remained low, enhancing use by the poor.

“The mobile technology therefore is contributing towards financial inclusion and services by cutting costs, improving access and is now a mode of savings from phones to savings accounts,” he said.

He said there was increased use of mobile phone financial services by both individuals and corporate organisations.

Although there is an increased use by businesses of the mobile money transfer, person to person transaction is dominant.

Listed companies with a large number of shareholders including Safaricom and Kenya Power already pay their dividends using mobile platforms which help companies to cut on paper costs while making it easier for reconciliation of records.

KenGen, Mumias Sugar, Scangroup and Kenya Airways amended their articles of association to allow for the use of electronic platforms to send annual reports to shareholders and pay dividends using electronic means, including mobile phones.

Telkom Kenya corporate affairs manager Angela Mumo says transfer from person to business through their network accounts for 20 per cent of total transfers.

“Telkom Kenya currently reimburses employee expenses via Orange Money and monthly pension payments. We collect utility payments via pay bill too,” said Ms Mumo.