FOCUS ON AFRICA: M-PESA
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Africa’s mobile money transfer service M-Pesa has led the world once – can it do it again? Vodacom’s Diego Gutierrez believes so The M-Pesa story is legendary in the payments history of Africa – after Kenya entered the paytech pantheon as the first country to launch a mobile money transfer service back in 2007.
Fifteen years, more than 50 million monthly users and 52 million transactions-a-day later, M-Pesa is helping write the next chapter for financial services by building itself a super-app. It’s a logical next step for what is now the biggest financial services provider in Africa by transaction volume – bigger than all the continent’s banks combined – and it’s being propelled by a joint venture inked in 2020 between Kenya’s Safaricom and its parent group, Vodacom, based in South Africa. The name of the joint venture, M-Pesa Africa, spells out a vision as much as a strategy; to build M-Pesa into a truly supranational brand.
THE EARLY YEARS Originally launched by local mobile phone operator Safaricom (then controlled by UK telecoms giant Vodafone, which owned the M-Pesa brand until recently), the service that allowed users to send and receive money by a simple SMS on a feature phone was adopted with blistering speed in Kenya. Initially designed as a safe and easy way to transfer money between individuals, pretty soon, customers were using it to pay cashless for goods in supermarkets, transaction-fee-free, via what’s now the Lipa na M-Pesa channel. There was no need to waste hours
queueing at Kenya Power centres where customers traditionally bought their electricity upfront, either. And employers began transferring earnings direct to casual workers’ M-Pesa wallets because it was safer and cheaper than dealing in cash. By the time of its 10th birthday, 96 per cent of Kenyan households were using their Safaricom/M-Pesa account to store, save, transfer and receive money, giving millions of people access to secure financial services outside of a banking system that mostly excluded them. Today, it’s said that more than half of Kenya’s entire GDP is transacted over the app. Expansion into other African countries with similar infrastructures and equally large numbers of people living in remote areas with no access to formal banking, also saw fast adoption. M-Pesa is frequently held up as a poster child for what can be achieved if you really understand the challenges customers face and build your model around them. “Last year, we transacted a quarter of a trillion dollars over the platform – that’s the money moved between wallets, and it’s growing in gigantic steps,” says Diego Gutierrez, chief officer for international business at Vodacom, which manages the M-Pesa service in Tanzania, Lesotho, the Democratic Republic of Congo, Mozambique and Ghana. M-Pesa is also active in Egypt and is poised to enter Ethiopia, Africa’s second most populous country with 114 million people, where banking services are limited and appetite for mobile payments systems enormous. As a telecoms operator, Safaricom hadn’t set out to replace cash back in 2007. Rather, it was just trying to find a safer, cheaper way of moving it on a
non-banking rail, after realising that its users were exchanging Kenyan shillings for airtime anyway in an informal economy. In launching the M-Pesa service, it used touchpoints that its customers were already familiar with: a feature phone and local storekeepers who sold Safaricom airtime and were recruited as M-Pesa agents to facilitate account top-ups and cash-outs. It was simple, effective and – if operated at scale by the provider that owned the infrastructure to deliver it – very profitable. But, beyond that, is there anything it can teach the rest of the world? Had Africa’s mobile money revolution continued to be limited to simple digital wallets and peer-to-peer transactions, perhaps not. But the story has moved on considerably since 2020.
Mobile pathway: As more people use smartphones, M-Pesa is maturing into a super-app
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Issue 12 | ThePaytechMagazine
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