M-pesa deals with banks push agents into a tight corner
Posted Thursday, May 27 2010 at 00:00
M-Kesho is a mobile-based bank account that provides for a seamless movement of cash between an Equity Bank account and M-pesa.
The product, just like its rival ‘KCB Connect’, is likely to grab services from the agents.
“We are likely to see more virtual transactions in which value moves from the banking system to the mobile platform,” Mr Musau said.
This means that banks are now competing with ordinary agents on two fronts — ordinary agency business and by reducing the need for cash.
Besides, banks have their moneybags as an advantage.
Ordinary telecoms agents suffer persistent shortages of float — the amount of money kept with an appointed dealer to facilitate transactions.
Banks on the other hand have no such problems and offer access to cash round the clock, further boosting their appeal.
Since the agents may have limited cash for (sometimes urgent) transactions, they prefer customers seeking smaller amounts of money, which translates into high commissions from more volumes.
This, among other hiccups, is likely to reroute customers seeking high value transactions to the banks where they run self-service and minimise chances of disappointment.
However, rural agents, due to limited access to ATM services, will have to continue enjoying a more secure business environment save for possible increased competition occasioned by urban operators moving from towns.
In October last year, Safaricom revised its agent commission structure in a bid to encourage high value transaction by paying more for these.
Withdrawing or depositing cash of between Sh20,000 and Sh35,000 earns the highest commission of Sh70. Handling deposits of a similar range earns Sh40.
For Safaricom, a cheaper and efficient M-pesa service is more a means of perfecting a value-added product to protect its pole position in the competitive mobile telephony market than as a revenue source.
In 2009, Safaricom earned Sh1.5 billion from M-pesa, representing 2.1 per cent of total revenue for the financial year.