Pros and cons of M-Pesa Generation II for business

I am impressed by the work that went into the M-Pesa Generation II platform iteration.

While it has grown in complexity, it covers almost all the permutations that make for a more efficient business operation where the speed of cash flow is key to sustaining many enterprises.

We have, in the past, explored how the banking sector was caught napping, as Safaricom extended its focus from peer-to-peer money movement to business transactions.

This has a number of benefits on SMEs, both in relation to trade between themselves and trade with large enterprises.

The benefits of M-Pesa Gen II are best realised when hinged onto valued added platforms such as Lipisha, KopoKopo, WezaTele and others, which via application programming interfaces (APIs), can marry data generated by a firm and automate certain processes with business owners avoiding the back-end admin complexity on the M-Pesa Gen II dashboards.

Payment collections

We have already been doing this for years, with players such as Cellulant, PesaPal, JamboPay among others having built sizable business providing payment aggregator services to a growing number of customers, most notably utility companies.

The M-Pesa Gen II value that is realised is on the consumer side, where LipaNaMpesa online is poised for an overhaul that will see a departure from the use of the Bonga PIN to complete online transactions.

The possibility of push payments opens up a new avenue of opportunities in differentiated M an E commerce user experiences. The result will be higher value baskets and lower cart abandonment rates, where most attrition happens at checkout.

Supplier payments

With a growing number of businesses having adopted the paybill and buy goods facilities, it is now possible to move payments directly from one paybill number to another in real-time.

Think of a scenario where the enterprise resource planning platform or customer relationship management system raises a payment request to a customer with all parameters already embedded and it only takes a simple maker — checker process to have the payments approved and moved with all authorisations and know-your-customer verified.

Access to capital

The only downside to the M-Pesa Gen II ecosystem that would apply to businesses is access to additional support services, core of which is access to loans.

Any growing business will at some point in their lifetime require this facility, whether it is to fuel growth or service a purchase order.

The standalone M-Pesa ecosystem lacks this facility which means that even at scale, banks still maintain this hold on the business consumer.

This means that business owners will probably opt to eventually route cash flows back into the traditional banking pipes. There is currently only one partnership – with KCB that provides an associated benefit; a start but hardly enough.

Maybe if M-Pesa was to be hived off and set up as its own entity and thereafter take on a banking licence would the service come full circle. This is highly unlikely though, so we work with what we have.

Mr Njihia is the CEO of Symbiotic | www.mbuguanjihia.com | @mbuguanjihia