Telecoms operator Safaricom #ticker:SCOM has inked a landmark deal that enables its 21 million M-Pesa customers to seamlessly send and receive money around the world, reflecting its acquisition of the capability to comply with stringent international money transfer rules.
The partnership with Western Union, which was signed in Nairobi yesterday, allows transfer of cash directly from M-Pesa wallets to the global cash remittance giant’s vast network of about 500,000 agents and bank accounts in 200 countries.
The deal underlines growing confidence in Safaricom’s capability to meet the stringent international regulations against money laundering and terrorism financing, concerns that delayed outbound cash transfers in the past.
The deal is an enhancement of the existing partnership signed in March 2011 allowing the transfer of money through Western Union to M-Pesa following a successful pilot in the UK from December 2008. Outbound transfers from M-Pesa have not been possible because of rising concerns over money laundering and financing of terrorism.
Safaricom is targeting new M-Pesa revenue streams from expatriates, wealthy Kenyans with children studying abroad as well as those with family and friends, who frequently travel overseas for business or leisure.
Cash transfers under the new M-Pesa service, part of the M-Pesa Global, have been capped at Sh70,000 per transaction with a daily limit of Sh140,000 in line with Central Bank of Kenya’s mobile money transfer rules.
M-Pesa users are now able to settle low-value overseas bills such as sending students pocket money directly from the phone, while foreigners working in Kenya can remit cash back home to their families.
Safaricom is also targeting a share of payments made by small businesses and individuals, who are increasingly shopping online in offshore stores in places such as Dubai.
The cash sent from M-Pesa will be collected from Western Union agents, while transfers to bank accounts are possible to clients in the United Kingdom, United Arab Emirates and Germany, Safaricom said.
Head of M-Pesa new business ventures Paul Kavavu said direct M-Pesa cash transfers to bank accounts abroad will be expanded to at least 80 countries in the next two months with the completion of integration with Western Union’s systems.
Priority will be given to countries based on transactions from Safaricom network, he added.
“Essentially, how we will do it is look at mapping of customers we have today where we see customers transacting or making calls,” Mr Kavavu said.
Safaricom will earn a minimum of Sh100 for remitting up to Sh5,000 to a Western Union agent abroad and Sh500 for more than Sh35,000.
“What I am seeing is that Safaricom are at the low end of these (remittance) charges in our network. They are encouraging people to come in and use this,” Western Union’s regional vice president for Southern, East and Anglophone West Africa Richard Malcom said.
The partnership follows April’s collaboration with PayPal, enabling customers to seamlessly transfer money between M-Pesa wallet and the US online payments firm.
“M-Pesa is one of Kenya’s greatest exports. It has become part of our social fabric with 17 million customers now transacting on M-Pesa daily,” Safaricom’s chief customer officer Sylvia Mulinge said.
Safaricom also has in-bound money transfer partnerships with MoneyGram signed in November 2014 and WorldRemit.
The out-bound cash transfer deal with Western Union is the latest in a raft of innovations that leverage on M-Pesa to generate additional revenue for Safaricom.
M-Pesa revenue in six months through September jumped 18.2 per cent to Sh35.52 billion, boosting the firm’s profit in the period to Sh35.52 billion from Sh26.20 billion a year earlier.