Safaricom rivals target M-Pesa in fresh battle for marketshare

Safaricom’s rivals want the Central Bank of Kenya to establish a seamless money transfer platform aiming to weaken M-Pesa’s dominance that has become a major battlefront in the war for control of the telecoms market.

In a proposal tabled before the Prime Minister and seen by the Business Daily, Safaricom’s rivals argue that such a platform would remove the high cost barrier that is preventing consumers from moving money across networks.

Though it is possible to send money across the networks, the transfer process remains complex and costs 10 times more than the price of sending money within a network, adding new dimensions to the factors that preventing consumers from changing mobile phone service providers.

Currently, recipients of money from other networks receive a Short Text Message indicating that money has been sent to them and have to go with the message to an agent of the operator whose platform was used to send the money for withdrawal.

Under the proposed structure, the CBK is being asked to establish a form of clearing house that processes all transactions from the four mobile money platforms M-Pesa, Airtel’s Zap, Yucash or Orange money and sends it directly to the recipient’s phone.

That should help remove the high charges that the operators levy consumers sending or receiving money from one network to another.

Consumers sending Sh25,000 from M-Pesa to rival networks such as Airtel must for instance part with Sh400 in transaction fee while the cost of sending and receiving a similar amount of cash from Airtel to rival networks is Sh200.

Some of the service providers say the establishment of a central clearing house will offer them headroom to significantly cut costs as they have recently done in the voice calls market.

Safaricom subscribers who are currently paying the heaviest price for cross-network transfers stand to gain the most from the seamless platform.

The initiative is being seen as part of the big battle for subscribers in voice, and data markets.

Safaricom – the market leader with 13.5 million subscribers on its M-Pesa platform has 22,000 M-Pesa agents.

Airtel has about four million subscribes while Orange, which launched its mobile money transfer in the second half of last year, has 100,000 users and 1,500 agents.

M-Pesa, short message service (sms) and data have become critical segments of Safaricom’s income, contributing 18.7 per cent of its total revenue.

It is expected that the firm will not easily let go of its stranglehold on the market.