Safaricom has scaled up the testing of a payment card that will be linked to customers’ M-Pesa accounts by issuing them to university students on a test basis.
The telecommunications firm started issuing the debit cards to students from the United States International University (USIU), Pwani University and Catholic University of Eastern Africa (CUEA) early last month, with plans to extend it to three other institutions.
The cards, called Blaze M-Pesa, and point of sale (POS) terminals will enable customers pay for services faster through the Near Field Communication (NFC) tap-and-go technology.
Safaricom has since June also been testing the M-Pesa Card – which will be used by regular clients – among its staff, as it prepares to take a bigger slice of transaction commissions from the multi-billion shilling electronic cash industry.
“We continue to test the boundaries of the service to identify how we can continue to extend the gains of the (M-Pesa) platform to an increasing number of customers and businesses,” Bob Collymore, Safaricom’s CEO, said in June, adding that it the cards will be launched “in coming months.”
The company is scheduled to release its half-year results on Friday.
The Blaze M-Pesa cards are being issued free of charge to thousands of students who are required to be on Safaricom’s Blaze tariff, which targets youth with personalised bundles usage.
The students can already make payments at several business at the Thika Road’s TRM Mall including Nakumatt, Persia Lounge, Subway, Pizza Inn, Artcaffe and several others which have the POS machines.
Restaurants such as Mambo Italia at the Garden City Mall and Coast Dishes near USIU as well as the Java chain across the city have also signed up as Blaze M-Pesa merchants.
NFC is a short-range, high-frequency wireless communication technology that enables the exchange of data between devices over about a 10cm distance. This will enable seamless transactions without customers having to use their mobile phone.
The cards also have a chip and PIN functionality to boost their security.
To make transactions, card owners will have to either tap their cards against the POS machine or slot it into the machine and input their PIN. The applicable funds will then be deducted from their M-Pesa account.
Normal M-Pesa charges will apply.
This is the third stab the leading mobile provider is making at the card payments business after launching the My 1963 cashless fare payment card in November 2014 and a prepaid Visa card in partnership with I&M Bank in 2011.
Unlike previous attempts where it enlisted partners, this time the company has decided to walk alone.
Safaricom customers currently pay varied fees for using the Lipa na M-Pesa service. Those using the platform to buy fuel, for example, pay a 0.5 per cent commission on the value of every payment made.
By March 2016 over Sh20 billion had been made in payments on the Lipa na M-pesa platform, with more than 44,000 merchants accepting the service, an increase of 74 per cent from the previous year.
The launch of the M-Pesa linked payment card is likely yet again to put Safaricom in a head-to-head competition with financial institutions.
This innovation comes on the backdrop of an announcement by commercial banks that they are setting up a mobile money transfer platform that will rival Safaricom’s M-Pesa.