M-pesa goes global in battle for mobile cash transfer pie

“Our survey shows a general downward trend in remittances flow between January and June 2009, and an upward trend in the next two months,” said Charles Gitari Koori, Director Research Department of the CBK.

In August remittances inflow increased by 11.1 per cent to $55 million from $50 million in July.

Tapping into this inflow is likely to provide mobile operators with a new source of income in an attempt to diversify products as revenues from traditional activities decline in line with a more competitive environment and economic conditions.

Safaricom’s latest move indicates it has surpassed yet another regulatory test.

Analysts say cross-border transactions are likely to refresh debate on how the movement of money is managed in the developed world, where regulatory issues have held back the launch of the service for over a year and a half.

By May of this year, Safaricom was still trying to get a formal go-ahead for the service from CBK, nearly two years after launching the trials.

Today’s launch indicates the firm has satisfied both British and Kenyan authorities that the service is not prone to money laundering and satisfies the know-your-customer-rules which enable authorities to track transactions.

In an earlier interview with Business Daily, Pauline Vaughan, the M-pesa Product Manager, said trial participants in UK were able to send money to Kenyan phone numbers via a web interface; thereafter being able to collect their cash from about 10 outlets.

Safaricom’s is a different model than that employed by Zain, which has opted to leverage banking relationships to create a borderless mobile money transfer solution.

Launched in late September, Zain’s service allows users to receive money from anywhere in the world directly to their mobile handsets as well as send funds directly to their bank accounts.

To roll out the service, Zain is relying heavily on the banking industry, through its partnership with Standard Chartered and Citigroup, which processes transactions using existing relationships with banks all over the world.

In order to operate the new service, Zain pools funds in an account held at Standard Chartered under the name Zap Trust Company.

It is into this account that any deposits or withdrawals between banks are made before the Zap system forwards the virtual money to a Zain subscriber on their Zap accounts.

“The product brings together the security of traditional banking infrastructure with the convenience of the mobile phone,” said George Held, the Products and Innovation Director at Zain Group.

Zain is still working out regulatory issues such as how much can be transferred through the service, which is active within East Africa, on a country-to-country basis.