Safaricom limits key M-Pesa services ahead of upgrade

Safaricom will from Thursday suspend the registration of new M-Pesa customers and transfer of cash to rival mobile phone networks until an ongoing upgrade and transfer of its IT system from Germany to Kenya is completed on Sunday.

M-Pesa subscribers will also be barred from sending cash to unregistered users or changing their personal identification numbers (PINs) in the period, as the telecommunications firm embarks on the final test run for the relocated mobile money servers.

Registration of new customers on mobile banking services M-Shwari or M-Kesho will also not be available from 11pm tonight to Sunday noon.

“The second generation M-Pesa platform has a bigger capacity, is much faster and will allow other merchants to connect directly to the platform, unlocking a new era of transformational mobile financial services,” said the Safaricom general manager for financial services Betty Mwangi-Thuo at a media briefing on Wednesday.

The process of installing the M-Pesa servers locally began 24 months ago, with Safaricom having brought in 50 engineers from across the globe, mainly from Vodafone, IBM and Huawei to design, install the new platform and relocate the servers.

It is expected to minimise service outages that occur whenever the undersea fibre optic cables that relay information to Germany and back are damaged.

The installation of M-Pesa servers locally brings to an end nearly eight years of foreign hosting, which has at times been blamed for delayed response to service interruptions.

READ: Safaricom finishes moving M-Pesa servers to Kenya

The new M-Pesa platform has capacity to handle 900 transactions per second, up from the previous 450 per second, which could improve on transaction speeds.

Local hosting is also expected to save costs for Safaricom, which will now be in charge of maintenance of the system as opposed to currently when it pays service fees to British telecommunications firm Vodafone—also its biggest shareholder.

Ms Mwangi-Thuo said the new platform comes with additional functions that allow for M-Pesa’s integration with those of other vendors in banking, micro-insurance and retail sectors, especially supermarkets.

She, however, said it is “too early” to comment on whether Safaricom will pass on the realised savings to customers in form of lower M-Pesa tariffs.

Safaricom has invested heavily on the new infrastructure. A higher processing capacity is also expected to enable Safaricom clients to settle post-paid electricity bills, insurance premiums and bank payments in real-time.

It currently takes 48 hours for payments made to Kenya Power to reflect on the electricity distributor’s systems while those made to the National Hospital Insurance Fund take 76 hours.

“Our partners such as Kenya Power, will have to upgrade their back end to make it possible to enhance the time it takes for the transactions to reflect within a shorter period on their side,” she added.   

The upgrade and shift of the platform comes at a time when M-Pesa is also eyeing bulk government payments such as pensions and salaries paid to beneficiaries in remote locations.

The mobile money transfer sector is also expected to come under increased competition with the licensing of four Mobile Virtual Network Operators (MVNO); including Equitel, Tangaza Pesa and ZionCell.

China’s Huawei has been building the second-generation platform, which is also designed to have improve re-routing of traffic when the system fails.

Safaricom has recorded growth of M-Pesa subscribers to 19.95 million as at March 2014 from 14.9 million in 2012 and its agents to 80,335 from 39,401 in the period.