Politics and policy

M-Pesa tightens grip on Sh1.2 trillion mobile money market

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Central Bank of Kenya Governor Njuguna Ndungu and Tangaza Managing Director Oscar Ikinu try out the monet transfer service during the launch of the Mobile Pay Tangaza E- commerce and money transfer at the Sankara Hotel on January 24 2011. FILE

Central Bank of Kenya Governor Njuguna Ndungu and Tangaza Managing Director Oscar Ikinu try out the monet transfer service during the launch of the Mobile Pay Tangaza E- commerce and money transfer at the Sankara Hotel on January 24 2011. FILE 

By David Mugwe and Okuttah Mark

Posted  Monday, February 27  2012 at  19:55

Money transfers through mobile phones crossed the Sh1 trillion mark in 2011 with Tangaza shocking its more established rivals to lie behind Safaricom’s M-Pesa in market share, reviving debate on whether Kenya should adopt seamless mobile money remittance platforms.

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Data from the Central Bank of Kenya shows that in the month of December 2011 alone, M-Pesa moved Sh116.6 billion, miles ahead of Tangaza’s Sh1.31 billion, which is about three times the combined share of the other four rivals for that month.

“There is increased use of mobile phone financial services by both individuals and corporate organisations.

Person to person is still dominant while business to persons and persons to business - are all increasing,” said CBK governor Njuguna Ndung’u in a presentation posted on the regulator’s website.

Airtel Money transferred Sh420 million, Orange and Yu Sh20 million each while MobiKash handled Sh4 million, the Central Bank data showed.

However, Telkom Kenya’s corporate affairs manager Angela Mumo said Telkom Kenya had moved Sh40 million more than reflected in the CBK data.

While analysts see the emergence of Tangaza, which transfers money across all the mobile networks and allows money to be moved between banks and virtual accounts on cell phones, as a blow for seamless transfers, market players are divided over its impact on transaction costs.

“[Seamless money transfer services will] speed the flow of goods and services.

This means the economy can grow faster because the market can exchange more goods and services in a shorter time,” said Oscar Ikinu, the chief exceutive officer of Mobile Pay which owns Tangaza, said.

He said that with seamless money transfer services, operators would create a clearing house just like that for commercial banks, allowing a central point for all transactions between operators.

Safaricom, however, said seamless money transfer services would erode the convenience that have made the platforms popular.
“It will, for instance, bring to an end instant money transfers because all transaction have to pass through a clearing house.

This would cause undue delays and increase the cost of transferring money,” said Safaricom Chief executive officer Bob Collymore.
Data from the Central Bank of Kenya (CBK) shows that the value of transactions done through mobile phones rose by 60 per cent to Sh1.169 trillion with all six mobile money operators registering an increase in customer numbers.

In the twelve months of 2010 and 2009, the value of transactions done through phones was Sh732 billion and Sh473 billion, respectively.

Prof Ndungu said that transactions between businesses and individuals started picking up in March last year as the number of banks with mobile money financial services increased.

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