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Economy

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

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 

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.

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.

As at the end of the last month of last year, the number of customers using mobile money services had risen to more than 19.2 million.

The industry transferred Sh118.4 billion in December with person to person transactions being valued at Sh63.87 billion or 58 per cent of the transactions while those between businesses and individuals were valued at Sh54.53 billion. As at the end of last year, Safaricom had 15.21 million mobile money customers making it the largest mobile money transfer service, followed by Airtel which had 3.16 million customers.
Yu had 520,000 customers against Telkom Kenya’s 130,000, MobiKash 110,000 and Tangaza 70,000. Although Tangaza had the fewest number of customers, it transferred Sh1.31 billion in December, Mr Ikinu attributed December’s performance to increased corporate money transfers and stock trading adding that seamless money transfer services would grow substantially once a legal framework being worked on by CBK is in place.

Though it is presently possible to send money across networks, the process of realising value is tedious and charged premium rates, making money transfer services a key tool in retention of subscribers.

Currently, recipients of money from other networks receive a Short Text Message indicating that money has been sent to them and have to go with the message to an agent of the operator whose platform was used to send the money for withdrawal.

Under the seamless structure CBK would establish a clearing house that processes all transactions from the six mobile money platforms and sends it directly to the recipient’s phone.

This would loosen an operator’s grip on the mobile money platform which has emerged as a major competitive tool.

Transferring money from mobile to mobile using Tangaza costs between Sh21 and Sh30 for amounts between Sh100 and Sh35,000 depending on the network while withdrawals cost between Sh25 and Sh170 depending on the amount.

Sending money using M-Pesa costs between Sh10 and Sh60 for registered users and between Sh60 and Sh250 for unregistered users for amounts ranging between Sh50 and Sh70,000 while withdrawals cost between Sh15 and Sh300 for amounts between Sh50 and Sh70,000. Mobikash, which had more subscribers than Tangaza but fewer agents as at the end of the year, is the only other operator which allows for transfers to and from other networks.

When CBK is done with the regulations, Mr Ikinu said, operators would work out how money would be settled across their networks.

In the twelve months of last year, the number of mobile money agents grew to 50,471 and include outlets such shops, petrol stations, chemist shops, banks and micro-finance institutions which are also agents and super agents.

Safaricom and Airtel had 35,350 and 3,161 agents respectively while Yu had 5,579 and Telkom Kenya 3,609 agents.

Mobile money transfer firms whose businesses do not offer voice services Mobile Pay and Mobikash Afrika had 1,745 and 1,027 agents respectively.
“We are demanding for non-exclusive distribution for mobile money just like for bank agents to make it a level playing field,” said Ms Mumo.

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