Rise of mobile cash transfer service

Family bank in Kenya just recently introduced the service of repaying loans through mobile phone money transfer.

Kenya Airways has also made it possible to pay for an air ticket through the same channel.

However, as we celebrate this technology, it is critical we dig deep to identify the inherent risks.

In this field, the main risk factors may include anonymity and poor oversight.

Anonymity is the risk of not knowing a customer’s actual identity, and it can be mitigated through enhanced due diligence on Know-Your-Customer.

This is the buzz word in the financial sector alongside the issue of Anti-Money Laundering policies.

Poor oversight can be mitigated by ensuring there is transparent guidelines on mobile services, open licensing, regulation of providers, and effective risk supervision by the providers.

It is prudent to go further and “legislate” the regulations that will govern the use of these money transfer services.

The pyramid schemes in Kenya is a perfect learning example of how-not-to engage in un-regulated and phony businesses.

Macharia is a Risk Management Practitioner at Panafrican Housing Financial institution, Shelter Afrique, Nairobi. Email: jkihuro@yahoo.com