MasterCard opens hub in Nairobi

Global payments system MasterCard has established its regional hub in Nairobi to serve the Eastern Africa market and Mauritius and take on rival Visa International.

Nairobi becomes MasterCard’s fifth African hub joining Cairo, Casablanca, Lagos and Johannesburg – which initially served the Kenyan market. Its pursuit of the Eastern Africa market comes amid rising use of plastic cards for transactions – which also egged on its rival, Visa International to open a regional centre in Nairobi last year.

“We are establishing the new Nairobi office as a gateway through which MasterCard will liaise with its existing customers across the East African region,” said Daniel Monehin, the head of MasterCard in East, West Africa and Indian Ocean region.

“It will also be a launch pad for further expansion across the region, by providing advice to support MasterCard’s ongoing quest to shift consumers from traditional cash payment to a non-cash payment system.”

The multinational is targeting banks and companies, especially mobile phone operators, for a strategic partnership to sieze the renewed demand.

Data from the Central Bank of Kenya (CBK)show that as at the end of December 2011 there were 10.1 million plastic cards that transacted Sh577.9 billion, a 12 per cent increase from the previous year’s Sh517.3 billion transacted through 7.6 million cards.

The increased use of plastic money is linked to the emerging middle class, the promotion of debit cards by commercial banks and their acceptance as a mode of payment by service providers such as hotels, petrol stations and retail chains.

MasterCard joins multinationals such as General Electric, Bharti Airtel, Nestlé, Heineken and Coca-Cola that have set their regional shops in Kenya, thanks to the centrality of Nairobi and ease of getting skilled employees for their operations.

Analysts said that while the East Africa market is growing, Kenya remains the main target market for the card providers.

“If you look at Kenya on its own it is a ready market because of its population and growing incomes,” said Francis Mwangi, a research analyst at Standard Investment Bank.

For example, Kenya in 2010 had 7.6 million cards which was greater than Tanzania, Uganda, Rwanda and Burundi combined.

The four countries have about one million card holders.

The multinational card providers are also eyeing deals with mobile operators’ cash transfer services, hoping to ride on the 18.2 million subscribers. “Firms like MasterCard will be leveraging on the mass market made available by the mobile phone,” said Oscar Ikinu, the CEO of Tangaza—a mobile money transfer service.

The ideal situation, said Mr Ikinu, will be for subscribers to have an alternative platform where they can send and receive money internationally.

jgachiri@ke.nationmedia.com