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.

[Read more…]

Kenyan mobile money and the hype of messy statistics

Mythical MPESA statistics: 43% of Kenya’s GDP is sent through M-PESA

DevLog@Bath

By Susan Johnson

The hype around the success of mobile money in Kenya has been growing as mobile payments develop both there and worldwide. This week’s Economist cites a figure that 43% of Kenyan GDP is being channelled through M-Pesa each year, attributing the statistic to Safaricom itself. The figure has been rising from 31% last year, which was cited by both The Economist and the Financial Times. In August 2013, GSM Association released an infographic on “The Kenyan Journey to Digital Financial Inclusion”, which also used the 31% figure. The World Bank, CGAP, AFI and others have also used or cited such measures of progress in this field.

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Take away thoughts from Mobile Money & Digital Payments Conference

Take away thoughts from Mobile Money & Digital Payments Conference

Post by Faisal Khan:

Take away thoughts from Mobile Money & Digital Payments Conference

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.

[Read more…]

FinTech Takes on East Africa

Introduction: Leapfrogging Sub Saharan Style

remittances

Leapfrog – is commonly associated with East Africa.  Sub Saharan Africa’s potential to overcome persistent challenges in novel ways abound in heaps –attributable to a convergence of forces i.e. a rapid technological boon and a resurgence of SSA development activity. As an example, the wild success of a simple communication tool, the mobile phone transformed traditional banking models and prompted thoughts on next generation financial services. SSA is poised to ride on technology rails and in a truly unique fashion leveraging technology to break down traditional barriers to financial access.

Bright B. Simons, on a past post for the Harvard Business Review

“In much the same way that Africa’s lack of significant telecom capacity was a boon rather than a hindrance to the emergence of mobile telephony, its lack of legacy infrastructure for everything ranging from waste management to energy utilities could provide the appetite — non-existent in the West — for genuinely transformative, future-friendly reconceptualization of the very notion of infrastructure”

Breaking Banks: Mobile Money Operators redefine financial services

Take financial services in East Africa which are increasingly offered through a simple communication tool, the mobile phone. The far reaching implications of fusing technology and financial synergies to address developmental challenges are of a grand scale. For the unbanked, access to financial services, credit, savings accounts, investment schemes and innovative financial products are now feasible en masse through last mile cellular network channels. [Read more…]

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…]

PesaBit #003 : Why the Matatu Cashless payment initiative failed

bebapay-googleafrica-tweetA little more than a year ago, Equity Bank and Google partnered to offer Nairobi commuters NFC based prepaid cards and simultaneously equipped matatu touts with android phones accepting NFC payments. No issuing, acquiring and transactions fees were involved; matatu owners now had an auditable tool to aggregate daily collections straight into their bank accounts. In light of Kenya’s fast tech based economy, on paper and high up in the boardrooms, this was ostensibly a brilliant idea.

Today, the online business daily ran a title “Family bank joins quest for cashless fare license”. The Kenyan Government has been keen to formalize the 218 Billion ($ 2.44 billion) public transport industry – matatus (collectively, vans and buses). Despite its obvious far reaching implications on curbing corruption, inefficiency, regulation and taxation– the move hit a snag and I wonder if Family Bank have an alternative to where its predecessors – Equity Bank and Google fell short. [Read more…]

PesaBit #002: Remittances In Kenya, Ripe Market Segments for Banks, MNOs & SACCos

Remittances into Kenya 8 year growth Pesa bit #002

Heated competition in East Africa for large scale customer acquisition has opened up the playing field to multiple players offering financial services, banking, mobile banking and a whole host of innovative financial products and services. In what is characteristically East African, the lines between Banks, SACCOs and MNOs are becoming blurrier. Equity bank and 3 other financial institutions are ready to get into the mobile money space through precedent MVNO regulation. Safaricom and CBA bank now jointly offer a micro lending mobile platform that set precedent as well. Competition is driving innovation.

The next frontier of heavy competition and outmaneuvering is in market segmentation. For this PesaBit edition, I particularly favour remittances as a lucrative market segment for financial services firms to desperately seek to entrench themselves in for new revenue streams. A diverse set of revenue streams is a logical step in the competitive East African banking & payments scene. Competition has led to thin margins albeit new market segments remain untapped. Remittances is a unique revenue source for example, in the wake of the financial crisis of 2008, while FDI inflows into Sub Saharan Africa significantly dropped, remittances exhibited resilience even displaying growth year on year. The market size is $ 1.29 billion in Kenya and $ 1 billion in Uganda. The figures are convincing and the above chart from the Central Bank of Kenya shows strong year on year growth from as far back as 2005. [Read more…]