While western operators try and try again with NFC-based payments, and the US’s unfortunately named Isis venture is forced to rebrand, the real potential for mobile money is seen in the M-Pesa service in parts of Africa. Safaricom, the Vodafone joint venture which runs services for the unbanked in Kenya, is set to open up its sales network to rivals, as it looks to protect its near-monopoly from new entrants.
The 85,000 M-Pesa sales agents across Kenya will now be able to run these services alongside competitive offerings such as Airtel Money and Orange Money, in the same premises.
Safaricom’s concession is a win for rival Airtel, which has been pushing for mobile payments services to be made interoperable and therefore more competitive. The fight has exemplified the way that large multinationals (Airtel is a subsidiary of India’s Bharti) are – often in contrast to their counterparts in more mature markets – using innovative services to gain market share across sub-Saharana Africa and south Asia.
The creation of a huge network of sales agents has been key to the huge success of M-Pesa, which has 18.1m customers worldwide (over 15m in Kenya) and handles almost 50% of Kenya’s GDP, by some estimates. It has also helped make Safaricom the most profitable company in east Africa. The service has also been launched in other Vodafone markets such as Tanzania. In March it reached its first European country, Romania, and it is also offered in South Africa, Democratic Republic of Congo, India and Afghanistan.
Whereas NFC seeks to encourage users in developed markets to adopt a new way of paying – and one which requires changes to handsets and merchant terminals – M-Pesa has the easier task of supporting consumers without traditional bank accounts.
Their need for a non-cash payments mechanism is, therefore, more urgent, and M-Pesa uses a simple SMS-based approach which can make and receive sums even on low cost handsets. There is even a new service called Kipochi, which is building a bridge between Bitcoins and M-Pesa.