200 Chinese experts to install M-Pesa server in Nairobi

Safaricom has contracted 200 experts from Chinese technology giant Huawei to install a new M-Pesa server that will be located in Kenya, ending nearly eight years of the mobile money system’s location in Germany.

Hosting the M-Pesa servers locally is expected to minimise service outages that occur whenever the undersea fibre optic cable is damaged and also save costs as Safaricom will now be in charge of maintenance of the services as opposed to currently when it pays fees to Vodafone.

Safaricom has in the past three weeks been forced to re-route its international traffic to satellite platforms after its main link to the global network of high speed Internet, the TEAMs cable was damaged in deep sea.

“Today we pay Vodafone (for maintenance), however when the M-Pesa severs are relocated here we will incur the capex and maintenance expenses,” said the telecommunication company’s CEO Bob Collymore in an interview following the release of the firm’s annual results on Monday.

READ: Safaricom raises dividend payout to Sh19 billion

In Germany, Vodafone had contracted US technology giant IBM to maintain the M-Pesa servers.

Currently Safaricom pays Vodafone between 10 and 25 per cent of the revenues generated through M-Pesa as royalty fees.

READ: Vodafone set to cut M-Pesa fees for Safaricom

In its financial year ending March 2014, M-Pesa transactions earned Safaricom Sh26.6 billion meaning that Vodafone is set to get at least Sh4 billion in royalties.

With the relocation of servers Safaricom said fees paid to Vodafone is expected to come down but did not disclose to what levels saying this is still under negotiation.

“We have not computed the total cost that will be incurred in migrating the servers to the country and it is not possible give a figure yet, its work in progress,” said Mr Collymore.

More than 625 institutions — ranging from banks, insurance firms, schools and Sacco groups, are listed on Safaricom’s website as using M-Pesa to pay bills or dividends.

Data revenue

Part of Safaricom’s game plan is to grow its data revenue by increasing M-Pesa’s share of bulk corporate transactions.

M-Pesa was launched in Kenya in 2007 as a person- to- person mobile money transfer service but has over the years evolved into a popular payment model that is used by small business and big corporations to make bulk payments.

Since it was launched in 2007, M-Pesa has steadily grown to become a major contributor to Safaricom’s profit.

The M-Pesa servers will be installed in Safaricom data centres during the year.