Mr Michael Joseph, Vodafone director of mobile money. Safaricom has partnered with Vodafone to enable cross-border mobile money transfer. PHOTO | FILE
What you need to know:
Safaricom has partnered with Vodafone to enable cross-border mobile money transfer.
The two telcos are betting on their vast number of agents and low cost of transactions to get a piece of the money transfer pie between Kenya and Tanzania.
Under the agreement, Safaricom subscribers sending money to Vodacom’s M-Pesa network would be charged 1 per cent of the value of transaction plus an exchange rate fee. The same will also apply to Vodacom M-Pesa clients.
Safaricom is targeting a slice of the commission income from the Sh12 billion annual remittances sent between Kenya and Tanzania by enabling customers in the two countries to send and receive cash through M-Pesa.
The partnership will involve working with a Tanzanian subsidiary of Vodafone, the UK firm which owns majority shares of Safaricom.
The two telcos are betting on their vast number of agents and low cost of transactions to get a piece of the money transfer pie between the two countries.
“Formal remittances between Tanzania and Kenya were around $133 million (Sh12.1 billion) in 2012, according to the World Bank. With a substantial unbanked population transacting mainly in cash, the Tanzania-Kenya corridor represents a significant opportunity for M-Pesa to give people and companies an accessible, low-cost alternative to traditional international remittances,” said the Vodafone director of mobile money and former Safaricom CEO Michael Joseph in a statement.
Under the agreement, Safaricom subscribers sending money to Vodacom’s M-Pesa network would be charged 1 per cent of the value of transaction plus an exchange rate fee. The same will also apply to Vodacom M-Pesa clients.
Safaricom has been offering one-sided international cash transfer services under a licence that only allowed it to move money into Kenya through partners such as Western Union and MoneyGram.
However, in December, The Central Bank of Kenya awarded the telco a cash remittance operating licence, enabling the telecoms giant to transfer money out of the country and opening new markets for its popular mobile money transfer service, M-Pesa.
Safaricom has nearly 20 million M-Pesa customers while Tanzania’s Vodacom has seven million.
With a presence in 10 countries Kenya, Tanzania, South Africa, Lesotho, Democratic Republic of Congo, Egypt, Mozambique, India, Romania, and Fiji, M-Pesa has emerged as the most compelling mobile-money proposition catering for both individual and corporate transactions.
“This is a new chapter in the continuing growth story of M-Pesa. Enabling transactions between Kenya and Tanzania will make more convenient for individuals to transact across borders and unleash the transformative power of a first of its kind cross-border payment system,” said Safaricom CEO Bob Collymore.
Rene Meza, Vodacom country manager said the normal tariffs for local money transfers would also apply for money being sent to Safaricom’s M-Pesa.
“Vodacom Tanzania’s M-Pesa customers will be able to consult the exchange rate of the day in the M-Pesa menu and they will also get a confirmation of the Kenyan shilling being sent to Safaricom’s M-Pesa before they confirm the transaction,” said Mr Meza told the Business Daily via email.
The cost of international remittances through traditional channels like banks or money transfer operators can be up to 31 per cent of the transaction, depending on the service provider.
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