My takeaways from E-payments panel at Connected 2016

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I was delighted to sit on an electronic payments and the future of cash panel at the connected 2016 conference. As co-founder and Chief Analyst at Umati Blockchain ltd., my invitation scope was Bitcoin, virtual currencies and the blockchain. It was great getting feedback from the audience, on what is wrong with Kenya’s cashless transition. A healthy nuance of talking points emerged from the mixed backgrounds of the panelists.

Here is a 30 min edited video of the panel session

These were my takeaways

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How Kenyan Banks are fighting off Mpesa

Once upon a time, Kenyan Banks lost to Mpesa. It’s been 7 years, and they have since made a number of strategic moves to win back the market

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Why we should Slay Mpesa, and save the town

article2Kenya and east africa’s mobile money systems are overly reliant on Telco’s networks and SIM modules. The status quo is detrimental to Banks, Non-banking financial institutions and a whole host of digital token value services e.g sports betting and prepaid electricity tokens.

Telcos, now Mobile Money Operators, are a Banks wet dream. Peer to peer money transfers in Kenya almost always route through a mobile network operator’s SMS, SIM card and USSD channels; they are the gatekeepers.
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Kenya clamps down on Cash

From my Twitter timeline, I can tell there is a lot written about the ongoing war on cash; an international war on physical paper and coins. Today, it was much closer to home.

Central Bank’s new tough rules to monitor large cash transactions was an article from the Standard Digital dated January 28, 2016 [Read more…]

How much it costs to send money btwn Kenya & Tanzania via Mpesa

A couple of weeks ago Safaricom and Vodacom announced a cross border money transfer service on the Tanzania – Kenya corridor. Both subsidiaries of UK-based Vodafone Group, are leaders in their respective home markets. Through this partnership, registered Mpesa and Vodacom users can send and receive money in either direction.

With assistance from my friend (Ofio) in Tanzania’s capital, Dar, I set to out to test this service and found out:

It costs 6.24% in total to send 4,000 TZs to Kenya. A 4.74% forex margin spread is applied plus 1.5% sending charges . The same applies for TZ to Kenya bound transactions from Vodacom to Mpesa.

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5 more things they didn’t tell you about m pesa

Cover Mpesa myths

Despite a fair number of attempts at elaborately fleshing out Mpesa for readers, in this article I outline 5 more things left out  by:

Claudia McKay & Rafe Mazer did an article for the CGAP titles “10 Myths About Mpesa: 2014 Update” – a follow up to a previous article by Claire Alexandre “10 things you thought you knew about Mpesa”. In both of these articles, 5 crucial things were left out that you should know about!

Mpesa is used on a contractual basis from Vodafone Group.

M-pesa is not a Kenyan invention, by any stretch. M-pesa is owned by Vodafone Group, was partly funded by the UK DFID, conceptualized by Nick Hughes – an executive at Vodafone – in 2003 and finally project managed by Susan Lonie – an m-commerce expert – from pilot to commercial operation.

A confluence of factors – fashionable sustainable development, microcredit prospects in East Africa and a willing mobile network operator, Safaricom – meant that Kenya was a hotbed for testing a pilot. [Read more…]

10 differences between Mpesa and Bitcoin

Bitcoin vs Mpesa featured image

Centralized – Decentralized

Mpesa is a centralized electronic money system owned by Vodafone. All transactions are settled on a centralized ledger on a central server.

Bitcoin is a decentralized electronic value transfer network owned by no one. All transactions occur on decentralized ledger on a distributed network.

Pegged to local fiat on 1:1 ratio – Free floating market price

KES 200 cash for MPesa KES 200 on a feature phone

Digital currency Mpesa is issued money, fully (100%) backed by liquid reserves on a 1:1 ratio. For every Mpesa unit in mobile wallets, there is matching fiat held in trust. The value is fixed.

Bitcoin is NOT backed by anything and derives its price from a free floating market exchange. Its value changes with market sentiments.

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Digital payments in East Africa (Part I): Card payment alternatives

Card payment alternatives in Kenya by pesa-africa

Card payment alternatives in Kenya by pesa-africa

Kenya and East Africa are actively transitioning to cashless payments systems. East Africa’s economies are largely cash based informal economies with its associated costs. Challenges in aggregating national transaction data, consumer spending patterns, tax administration there is really no shortage of incentives.

With no means to track sales, little data is available, and channels are too fragmented for companies to forecast production and distribution with any degree of accuracy.
Niti Bhan

Policy makers, governments, central bankers and the private sector are looking to cash in on the benefits of culturing digital payments for the Kenyan market; a variety of emoney and digital currency payment options thrive in Nairobi – the capital.

Central Bank of Kenya data reveals a total of 10million cards in circulation as at January 2013 in the local card payments industry.

Here is a basket representative of card payment alternatives in Kenya. [Read more…]

Why isn’t Africa adopting Bitcoins massively for money-transfers?

Bitcoin adoption in Africa, not what you expect

Answer by Michael Kimani:

There’s a lot of variables in play before bitcoin can be used for money transfer on a significant scale. I’ll outline a few.

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Pesabit #004 : Equity Bank & Safaricom Run Neck and neck over SIM Overlay

Safaricom Equity Bank Historical profit COmparison Chart

In the past 3 months, two juggernauts in Kenya have clashed over the introduction of SIM overlay technology into the market – Equity Bank Group (Bank) and Safaricom ltd (Telco).  Safaricom  Ltd.  the largest Mobile Network Operator in Kenya (67.9 % market share) while Equity bank is the largest bank by customer base (8 million +).

As the incumbent mobile financial services provider, Safaricom faces a direct threat to its dominant sway, MPESA from A controversial SIM overlay technology set to be introduced by Equity Bank into the market through its subsidiary Finserve. Equity bank made a strategic move in acquiring an MVNO license from the regulators, Communications Authority of Kenya. Through this license, Equity can venture into the cellular network business and more crucially, the mobile financial services business – MPESA’s turf.

By leveraging its proprietary ownership of the SIM, Safaricom has continued to lock out financial services firms from its service platform; effectively acting as gatekeeper. The trouble is

A single mobile device is not supposed to be restricted to a single service provider, especially when different service providers having the mutual business interest over a single mobile phone users

It is easy to see why it has been labeled a monopoly and followed by cries to open up their platform. The mobile phone is a clear winner as a form factor in East Africa. Knowing this, financial services firms have been itching to catch up after losing out years back to Telcos. [Read more…]