Mobile phone-based payments top other devices among Kenyan buyers

The mobile phone has become ubiquitous in everyday life of Kenyans from personal to business transactions.

Almost 90 per cent of consumers in Kenya use their mobile phones more than any other device, according to the new Mastercard’s Impact of Innovation study.

“Our study confirms that not only is there a huge appetite for new ways to pay, but consumers overwhelmingly want to use their mobile phones. In fact, many are ready to do so right now. For decades, payment cards have been the only reasonable alternative to cash — but consumers are saying loud and clear that they want digital innovations in all areas of their life,” says Mastercard Middle East and Africa president Daniel Monehin.

Preference for mobile payments remains very high in Kenya at 87 per cent, with 96 per cent of Kenyans using their smartphone as their primary device states the survey.

High levels of affordable and accessible Internet are driving the demand for e-commerce in the region.
Expansion in the 3G network has also meant that telcos are largely influencing the purchasing readiness of consumers online.

“Quite a lot of people in Kenya will never know PC-based Internet access. The first time they accessed the Internet was through their mobile phones not through a PC.

“As a company whose 70 per cent of the target market is structured in this way, mobile should be your default space of product development while PC should be integrated later,” said Peter Ndiang’ui, OLX country manager, in the East Africa eCommerce report.

Official data indicates mobile penetration in Kenya sits at 38.3 million up from 37.7 million subscriptions recorded during the previous quarter.

Consequently, mobile penetration increased to 89.2 per cent up from 87.7 per cent recorded last quarter.
The growth has been driven by the entry of affordable feature and smartphones, which range from Sh1,000 and Sh5,000 respectively.

This, coupled with better Internet connectivity, has created the perfect environment for a ‘phonesumer’.
“The desire for access of mobile data has become a key driver for the spike in Internet penetration, as prices of data subscriptions decrease, boosting mobile broadband subscriptions,” said the e-commerce report.

The data further indicates that large corporations have not been left behind in the mobile revolution, with banks extending business solutions such as mobile banking to their clientele. Other sectors that have benefited from the expansion of mobile usage include the travel industry with hotels and airlines offering on-the-go booking and check-in apps, while the health sector has facilitated medical information access to previously underserved population. Farmers are now able to sell their produce in real-time on mobile apps to customers they could never reach before.

Jumia Travel states that most of the payments received from holiday bookings are done via mobile money compared to any other mode. This accounts for 60 per cent of all payments received. In addition to this, 70 per cent of online traffic to the site is via mobile devices.

Mobile technology has been a major driver for the growth for e-commerce in terms of offering fast Internet access, convenient payment options, and ease of accessibility.

This has contributed to the emergence of retail e-commerce brands such as Jumia, Kilimall and Rupu.

Customers can easily shop and complete their transactions from their mobile devices and at affordable data rates.

Local developers have come up with apps that are relevant to the market. These include Sendy, a local on-demand courier service, that offers door-to-door, delivery and transportation services, and iTax — a tax collection app developed by Kenya Revenue Authority, that was successful in helping the taxman reach it revenue targets in June.

“In previous years many consumers told us that they had a negative or neutral view of digital innovation. But this survey shows a major shift in consumer behaviour.

“People across the diverse countries surveyed want a digital lifestyle and think it will benefit their lives. It is extremely exciting to see the pace and appetite for change in Kenya and across the various markets,” said Mr Monehin.

Disposable income

There is also a rising middle class with increasing disposable income.

The rise in affluence creates a better educated, more career-minded generation with a substantial purchasing power and a hunger for access to varied goods and services.

These young, tech-savvy, working professionals are driving the demand for e-commerce. They are a generation that are looking online to evaluate and purchase as their first point of contact with brands.

The East African region currently leads the world in mobile money accounts, with more than 21 million people using their handsets to access basic financial services.

“E-commerce is finally going mainstream in Kenya with the explosion of startups addressing key inhibitors like last mile delivery (Sendy), accurate addressing (OkHi) and payments (PesaPal),” says Aaron Fu, managing partner, Nest.vc, an early stage venture capital firm.

According to the online trade report, e-commerce in Kenya alone is valued at about $50 million (Sh5.05 billion) while in Africa it is predicted to be worth $50 billion by 2018.

This trend is expected to continue as new players, products and services shift to the mobile platform to tap the population that is already transacting on it.