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MPesa payments between Kenya, Tanzania launched

It is more costly to send money from Kenya to
It is more costly to send money from Kenya to Uganda than to Rwanda and Tanzania. PHOTO | BD GRAPHIC 

British telecommunications firm Vodafone, which is Safaricom’s largest shareholder, has launched Mpesa transfer services between Tanzania and Kenya, opening a new frontier for the mobile money service.

Vodafone has announced that 20 million Safaricom and seven million Vodacom Tanzania Mpesa customers can now make seamless transactions between each other.

“With a substantial unbanked population transacting mainly in cash, the Tanzania-Kenya corridor represents a significant opportunity for M-Pesa to give people and companies an accessible, low-cost alternative to traditional international remittances,” said Michael Joseph, the Vodafone Director of Mobile Money.

The announcement comes just two months after the Central Bank of Kenya awarded Safaricom a cash remittance operating licence, enabling the telecoms giant to transfer money out of the country.

Safaricom has been offering one sided international cash transfer services under a licence that only allowed it to move money into Kenya through partners such as Western Union and MoneyGram.

The new licence now enables Safaricom to take the battle for outward remittances to the doorstep of commercial banks and forex bureaus that have traditionally acted as agents for global money transfer providers.

“This is a new chapter in the continuing growth story of Mpesa,” said Safaricom’s chief executive Bob Collymore.

“Enabling transactions between Kenya and Tanzania will make it more convenient for individuals to transact across borders and unleash the transformative power of a first of its kind cross-border payment system.”

According to the World Bank, formal remittance between Tanzania and Kenya stood at $133 million, money which Vodafone is now seeking a slice of through the new deal.

Vodafone is estimated to have pocketed Sh1.7 billion of the Sh15.6 billion revenue that Safaricom generated from M-Pesa in the six months to September when the firm’s net profits rose 30 per cent to Sh14.7 billion.

The firm has been earning royalties of between 10 per cent and 25 per cent from M-Pesa’s annual revenues since February 23, 2007.

Vodafone says that the new partnership between Safaricom and Vodacom Tanzania presents a significant opportunity for even further growth as large populations in the two countries are still unbanked.

“The cost of transferring money internationally through traditional channels like banks or money transfer operators can be up to 31 per cent of the transaction, depending on the service provider,” Vodafone said in a statement.

“By comparison, using M-Pesa to transfer Sh4,550 across the Tanzania-Kenya border would cost around 1 per cent of the transaction plus a foreign exchange fee.”

M-Pesa now represents approximately 22 per cent of Vodacom Tanzania’s service revenues.

Following the success of Mpesa in Kenya, the service has since been launched in nine other countries. They are: Tanzania, South Africa, Lesotho, DRC, Egypt, Mozambique, India, Romania and Fiji.

Vodafone says that the Tanzania-Kenya deal will now be replicated in other partner countries.

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