Corporate

M-Pesa agent commissions rise 25 per cent to Sh10.6bn

An M-Pesa agent serves a customer in Nairobi. PHOTO | FILE
An M-Pesa agent serves a customer in Nairobi. PHOTO | FILE 

Safaricom’s M-Pesa agents earned total commissions of Sh10.6 billion in the year to March 2014, equivalent to nearly half (40 per cent) of the mobile money platform’s revenue.

The agents’ take-home grew by a quarter from Sh8.5 billion in 2013 driven by an increase in M-Pesa subscribers and a surge in the average number of transactions per customer.

Safaricom spends Sh40 out of every Sh100 the telco earns from M-Pesa to compensate mobile money agents —offering a peek into the sales commission model for the mobile money transfer service.

Safaricom generated Sh26.5 billion in revenue from the M-Pesa service last year — representing nearly a fifth of total turnover.

“Safaricom continues to push its transforming lives agenda by providing direct employment and indirectly to over 200,000 people country wide,” said Nzioka Waita, the telco’s director of corporate affairs.

The total number of M-Pesa agent outlets has grown more than four-fold in the last five years to 81,025 shops from 17,653 in March 2010.

This means that each M-Pesa dealer earned an average commission of Sh10,989 per month last year compared to a monthly average of Sh35,668 in the fiscal year 2010.

Safaricom said it has turned to innovation by developing additional mobile cash products to open new revenue streams for M-Pesa agents.

“We continue to develop innovations that provide additional ways for our agents to earn deposit commissions, these include M-Shwari and the recently launched Lipa Na M-Pesa.”

A study funded by the Bill & Melinda Gates Foundation attributes the declining earnings for mobile money agents to the growth in number of agents and increased competition for clients.

“The large amount of agents in the market is limiting profitability per agent, and driving dis-satisfaction from agents,” says the research by Indian consultancy firm MicroSave.

The research sampled 2,113 mobile money agents across Kenya’s major urban centres and rural areas through face–to–face interviews at their business premises.

The MicroSave study shows that Kenyan mobile cash agents earn the lowest commission of about Sh6,160 ($70) per month followed by Uganda Sh6,864 ($78) with the most lucrative agents being in Tanzania at Sh8,360 ($95).

“Tanzanian agents earn revenue from multiple providers due to high levels of non-exclusivity.”

The study further reveals that 17 per cent of mobile money agents in Kenya are not profitable compared to 13.5 per cent in Uganda and Tanzania’s five per cent.

The Competition Authority of Kenya (CAK) in July ordered Safaricom to open its M-Pesa agency network to rivals – meaning the outlets can now double as service points for other mobile money services.