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M-Pesa faces headwinds by rival Equitel


An M-Pesa user withdraws cash from a Safaricom agent. FILE PHOTO | NMG

Equity Bank’s Equitel Money has grown faster than Safaricom’s #ticker:SCOM M-Pesa mobile money payments (or mobile commerce) in the past two years.

Data from the Communications Authority of Kenya (CA) shows that Equitel’s value of mobile money transactions grew 198 percent comparing the quarter to June 30, 2016 and that to June 30 this year while that of M-Pesa rose by a margin of 86 percent.

The value of mobile commerce grew by 368 percent for Equitel and that of M-Pesa by 239 percent comparing the same periods.

In terms of mobile payments (or mcommerce) market share, CA data shows that Equitel’s stood at 23 per cent in the quarter to June 30 this year compared with 17.3 per cent in the same quarter two years ago.

At the same time, Safaricom’s market share was 76.8 per cent as at the same quarter compared to 80 per cent two years ago.

In absolute terms, however, Safaricom’s transacted a bigger Sh1.1 trillion in the quarter to June 30, 2018 compared with Equitel’s Sh328.1 billion.

Slower pace

The data shows that the giant mobile phone and money operator has been growing at a slower pace than its bank-linked competitor.

Sterling Capital said Equitel has slowly eroded the telecom giant’s market share in mobile money payments (or mobile commerce) in the past year and that proposed regulation poses further threat.

The analysts note that Safaricom has been forced to revise mobile commerce (or Lipa na M-Pesa) tariffs downwards to counter the threat posed by Equitel.

“The effectiveness of this strategy (cutting prices) in growing market share is evidence of Safaricom’s lack of pricing power in the mobile payment business,” says Sterling Capital.

Equitel’s growing strength in mobile money payment is attributed to the Equitel Eazzypay being comparatively cheaper for merchants as customer payments made through the platform are transferred directly into merchant’s Equity Bank accounts at no extra cost.

Ability of merchants to accept all mobile money wallets is also viewed as convenient for Equitel subscribers.

“[With] Equitel Eazzypay interoperability, merchants can accept payments from all mobile money wallets, making it convenient for subscribers across all networks,” says the investment bankers.

All mobile money platforms have, however, been made interoperable.

On regulation, proposals made by advisory firm Analysys Mason to the CA to break the dominance of M-Pesa threaten the revenues of the Safaricom money transfer platform if adopted.

Safaricom has disagreed with the proposals terming them as intended to punish its success