Safaricom aims at e-payment billions with M-Pesa cards

Safaricom plans to introduce M-Pesa payment cards that will be used for settling government services and taxes, in yet another move that puts the telco in a head-to-head competition with commercial banks.

The M-Pesa debit cards and point of sale (POS) terminals will enable customers to pay for government services, which the State has committed to shift online in a bid to curb corruption and ease transactions at public offices.

Both the national and county governments collect billions of shillings every day in taxes, fees, fines and other charges, which makes control of the payment system a lucrative business opportunity for banks and mobile money providers.

“Broadly, we are looking at how we can support government and counties to broaden our engagement as a payments channel and deliver mobile-based payments services as more of them start the transition to a cashless payment system,” said Safaricom general manager for financial services Betty Mwangi in an interview.

The move also marks yet another evolution of M-Pesa, which started as a person-to-person money transfers service.

For Safaricom, the transformation of M-Pesa into a comprehensive financial services platform is at the heart of its diversification and growth strategy.

M-Pesa revenues grew by a fifth to Sh12.5 billion in the half year ended September, recording the largest absolute turnover after voice business on which Safaricom is reducing its reliance.

Safaricom has signed deals with hundreds of partners that have seen M-Pesa emerge as a payments, savings, micro-credit, and bulk money transfer platform.

READ: Safaricom targets Nakumatt, Tuskys for Lipa Na M-Pesa

The firm says it has inked deals with 40 banks that extend M-Pesa services to their customers.

It also has over 2,000 pay bill partners and 139,000 merchants who accept payment for goods and services through the mobile-based platform.
“There is growing momentum and demand for convenient payment solutions made accessible by mobile phones,” said Ms Mwangi.

The promise of card and mobile-based payment solutions –driven by a 75 per cent uptake of cellular services in the country— has attracted more players to the cashless payment market.

KCB, for instance, has signed a deal with the government that will see the lender earn millions of shillings for disbursing cash to poor Kenyans under the social protection programme.

The lender will issue identified beneficiaries with biometric cards through which they will access their individual entitlements.

KCB will handle cash transfers amounting to Sh29 billion in the first year starting March, that is expected to cover 400,000 orphans, the elderly, disabled persons and poor urbanites.

The lender is also part of a group of firms that have launched rival cards for payment of fares in public service vehicles. Others are Co-operative Bank, Equity Bank and Safaricom.

“While revenue from cashless payments such as the Lipa na M-Pesa product is still small, there is significant potential,” Standard Investment Bank said in a research note sent to its clients.