Companies

Airtel and yu’s push to share M-Pesa agents rejected

agent

An M-Pesa agent attends to a client at Kangemi market in Nairobi. FILE

Safaricom has rejected the push by Airtel and yu to use M-Pesa agents to offer their mobile phone cash transfer.

The Nairobi bourse listed telco said it has spent billions of shillings to grow the M-Pesa agency and would not open the shops to rival operators including Essar Kenya the operator of yu.

Airtel Kenya petitioned the competition watchdog to take action on Safaricom for barring M-Pesa agents from offering rival’s mobile payment services, arguing that the practice amounts to an abuse of dominance.

But Safaricom reckons that its rivals have an equal opportunity to grow their agency network.

“By growing our agency network we have demonstrated that there is ample opportunity for our rivals to recruit and invest in their own agents so as to demonstrate their commitment to creating job opportunities for young Kenyans,” Safaricom told the Business Daily.

“Safaricom invests in excess of Sh1.2 billion annually on building and maintaining its M-Pesa agency network in order to serve our customers better.” 

Safaricom’s market share in the mobile money market stands at 73 per cent in terms of customers (18.1 million) and 88 per cent in terms of agents (78,856), according to the latest official statistics.

This means that the bulk of the mobile money transactions have been restricted in Safaricom’s network at time when most users are switching to paying for goods and services through their phones.

The value of money transferred through mobile phones rose by 23.4 per cent last year to Sh1.9 trillion, according to the Central Bank of Kenya.

M-Pesa accounted for 18 per cent of Safaricom’s Sh69.2 billion sales in the six months to September, compared to four per cent in 2009.The revenue has grown from Sh370 million in 2008 to Sh16.87 billion in the year to March.

READ: M-Pesa and text drive Safaricom’s profit to Sh11bn

M-Pesa is also seen as a pivotal arm of Safaricom’s operations which has helped sharpen the telecom giant’s competitive edge by locking in some subscribers in a market marked by cutthroat competition.

Though it is possible to send money across networks, the transfer process is complex and costly compared to sending cash within a network. For instance, an Airtel subscriber can send money to an M-Pesa user who will receive a short text message notifying them of the cash.

But the Safaricom subscriber will have to get an Airtel money agent to withdraw the money. The challenge is that Airtel has fewer agents compared to Safaricom.

This adds new dimensions to factors that prevent consumers from changing mobile phone service providers.

Sending money from M-Pesa to a customer on a rival platform also costs between double and triple the charges to another M-Pesa subscriber.

M-Pesa’s tariff structure shows costs Sh237 to send Sh20,000 from M-Pesa to Airtel Money while transferring the same amount to another M-Pesa user costs Sh55.

Airtel had also asked the Competition Authority of Kenya to investigate Safaricom for unfairly pricing M-Pesa services between its subscribers and rival networks, to cement its dominance.

The authority dropped the inquiry, prompting Airtel to move to court on grounds that the competition watchdog of favouring its rival Safaricom.
Safaricom is upgrading M-Pesa mobile system to make it faster and more reliable.

READ: Safaricom calls M-Pesa war truce with rival Airtel

China’s Huawei has been building the second-generation platform to increase capacity to 600 transactions a second and improve re-routing of traffic when the system fails.

M-Pesa’s popularity has strained the platform on which the Safaricom’s service now runs, causing occasional shutdowns and requiring routine upgrades in its capacity, now at 250 transactions per second.

M-Pesa was launched in 2007 and started as a service that allowed users to transfer and deposit cash via their phones.