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M-Pesa tops Africa with Sh1.6 trillion monthly deals

A Safaricom customer uses M-Pesa. file photo | nmg
A Safaricom customer uses M-Pesa. FILE PHOTO | NMG 

Mobile money platform M-Pesa is now processing transactions of Sh1.6 trillion per month in Kenya and other African countries, making it the largest payment platform on the continent.

The broader performance of M-Pesa has been disclosed by South Africa’s Vodacom Group which owns the financial service on a 50/50 basis with Safaricom #ticker:SCOM.

Vodacom also owns a 35 percent stake in Safaricom. The two firms teamed up in April to acquire the M-Pesa brand from their London-based parent firm Vodafone Group Plc through their investment vehicle M-Pesa Global Services Limited.

“Since launching in 2007, M-Pesa has grown to have the largest reach of any financial services provider in Africa, with 39.6 million active customers, including Safaricom, up 9.7 percent year-on-year,” Vodacom says in its latest annual report for the year ended March.

“Customers in our international markets, including Safaricom, now process more than $14.7 billion (Sh1.6 trillion) a month in transactions through the platform, making it Africa’s biggest payment platform.”

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Safaricom’s participation in the global payments market comes at a time when tech giants, including Facebook, are joining the space.

Facebook recently introduced an in-chat payment feature on its WhatsApp platform, starting with Brazil.

The performance report captures M-Pesa statistics for Kenya, Tanzania, Democratic Republic of Congo, Mozambique and Lesotho.

M-Pesa was discontinued in South Africa, Vodacom’s biggest market, in June 2016 after the service failed to gain a critical mass of users.

M-Pesa’s growing market share in the rest of the continent indicates the opportunity for Safaricom and Vodacom to grow their revenue and earnings, with the companies seeking to expand the service to more African markets.

They also plan to deepen its use beyond its traditional solutions such as person-to-person payments to new offerings, including investments and mobile commerce. "M-Pesa revenue from Vodacom international markets grew 29.8 percent to R4 billion (Sh24.7 billion), representing 18.3 percent of total service revenue," Vodacom said.

"This performance was underpinned by robust revenue growth in Mozambique (59.4 percent), strong growth in the DRC (48.3 percent) and Lesotho (27 percent), and a solid performance in Tanzania (7.4 percent), despite intensifying competitive pressure and a more challenging regulatory environment."

Charges

M-Pesa revenues from Kenya, the biggest market, rose 12.6 percent to Sh84.4 billion over the same period. Active M-Pesa subscribers in Kenya stand at 25 million. "M-Pesa now contributes 33.6 percent of service revenue while mobile data is now contributing 16.2 percent, thereby reducing the reliance on voice and messaging revenues," Safaricom says in latest annual report.

The telecoms operator charges M-Pesa users up to 2.6 percent of the value transferred to another subscriber on its network.

It also charges customers fees amounting to 26 percent of the cash withdrawn from its agents on some transactions.

Withdrawing Sh101, for instance, costs Sh27, according to Safaricom’s published tariff.

M-Pesa revenues in Kenya and the rest of Africa will take a hit this year after Vodacom and Safaricom waived fees on small transactions.

This was done to reduce handling of cash in the wake of the Covid-19 pandemic.

"We have made person-to-person M-Pesa transfers free up to threshold in most of our operations, to enable a contactless payment method and ensuring that traders can continue," Vodacom said.

Safaricom, for instance, says it expects to lose Sh19 billion worth of revenue by December from the waiver of fees on transfers of up to Sh1,000.

Vodacom says its joint venture with Safaricom will accelerate the growth of M-Pesa in Africa, including through introduction of new services.

"This positions us to accelerate investment in M-Pesa, enabling a range of mobile financial services and payments use-cases for consumers, agents and merchants," the multinational said.

"This will include the rollout of our nano-lending platform, which is already being used by more than 17 million customers in Kenya and Tanzania and has processed more than $2.5 billion (Sh270 billion) in loans."

In DRC, for instance, a micro-loan and savings product similar to Kenya’s M-Shwari was recently launched in partnership with FINCA, a micro-credit organisation. The service offers its customers the opportunity to save and earn interest via M-Pesa and to get micro credit repayable weekly or monthly, based on a credit score using customers’ mobile money and GSM transactions.

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