Mobile money remittances spell doom for cash collection agents
WorldRemit senior mobile analyst Alix Murphy with head of PR Ben Leong during the interview in Nairobi this week. The company processes 50,000 transfers to Kenya monthly. PHOTO | DIANA NGILA
Kenyans living and working abroad are fast opting for sending money directly to mobile wallets for convenience and speed, showing a pattern of migration from use of banks or cash pick-up agents.
Those sending money home, for example, have so far made one million money transfer transactions through WorldRemit, for example, since the firm began making remittances to Kenya five years ago.
The London-based online money transfer service says it processes 50,000 transfers to Kenya every month, with nine out of every 10 terminating to mobile money accounts such as M-Pesa and Airtel Money.
WorldRemit, founded by Somali techpreneur Ismail Ahmed, said transaction volumes to Kenya have more than doubled in the last 18 months, aided by the convenience of mobile wallets.
The average remittance amount sent to Kenya via WorldRemit is £100 (Sh13,000), the diaspora remittance platform said, adding that most transfers were done in the evenings, weekends, payday, or during festive seasons.
“People send smaller amounts, more frequently when sending directly to mobile phones,” said Alix Murphy, a senior mobile analyst at WorldRemit.
“Kenya is renowned for leading the world in mobile money and we’re now seeing Kenyans at the forefront of adoption of mobile money remittances,” said Ms Murphy in an interview with Business Daily.
Flat fee
WorldRemit fashions itself as a low-cost diaspora remittance platform, and charges a flat fee of £2.90 (Sh322) for transfers to M-Pesa up to the statutory limit of Sh70,000 per mobile transaction.
WorldRemit ranks Kenya as the biggest ‘receive’ market globally where mobile money platforms are used to access diaspora remittances.
Cash pick-up at agents and bank account option account for a tenth of the preferred channels.
The trend towards adoption of mobile money as a tool for diaspora remittances has seen traditional players such as Western Union and MoneyGram team up with telcos to allow customers to receive money from abroad.
Diaspora remittance companies are turning to mobile money payments because the service is deemed convenient and secure.
“As it gains in popularity, mobile money will become the method of choice for receiving remittances in many countries across the world,” WorldRemit said.
Ex-WB executive
Mr Ahmed, the brainchild behind the money transfer start-up, is a former World Bank executive who started WorldRemit in 2010 to help cut the cost of diaspora remittances especially to developing countries.
Sub-Saharan Africa remains the most expensive region to send money to with remittance costs estimated at 9.74 per cent of the principal, according to latest data from the World Bank.
The WorldRemit service is available in 50 ‘send’ countries and about 125 ‘receive’ destinations. The app is available in Android and iOS and has been downloaded more than 100,000 times, the firm says.
Kenyans’ increased uptake of mobile cash as a remittance tool has seen M-Pesa beat commercial banks to rank among the top channels in terms of diaspora cash processed through the platform.
Safaricom has signed partnership deals with more than a dozen remittance channels to allow receipts via M-Pesa.
The firms include Western Union, MoneyGram, Xpress Money, SkrilliT, Australia-based mHITs, British firm SkyForex, PostFinance of Switzerland, London-based provider Xendpay, TransferTo, and Mapex.
Upward trend
Statistics from the Central Bank of Kenya shows that Kenyans living abroad repatriated $861.9 million (Sh86.1 billion) in the six months to June.
“The sustained upward trend in part reflects the entry of additional money remittance providers into the market,” CBK said in a statement.
North America, mainly the US and Canada, remains the leading source of remittance inflows to Kenya, bringing in 49.3 per cent of total diaspora cash, according to CBK data.
Europe, mainly the UK and Germany, accounts for 28 per cent of diaspora remittances with the rest of the world, largely Asia, Pacific and the Middle East, bringing in the remaining 22 per cent, the regulator said.
Kenya has a total of 39.29 million mobile money subscribers who transact across six major platforms — M-Pesa, MobiKash, Airtel Money, Orange Money, Tangaza, and Equitel—backed by a network of 156,349 agents as at May.
