Increasing usage of mobile money services despite huge transaction charges by m-pesa
That Kenya is a leader in mobile money transactions is no secret. In the first half of the year, safaricom, reported that more than sh 400 billion ($40 million) were transacted through m-pesa alone. This represents more than 1/3rd of the country’s GDP. The service is so common that it has been ranked as the first mobile money service globally. As a result, the service has made billions of shillings for the company. Amidst all these, Kenyans have complained about the increasing charges of mobile money transfer.
In the country today, there are a number of mobile money transfer services with m-pesa being the market leader. Airtel, the second largest mobile company has its own Airtel money while Orange, the third company has its own Orange money service. To counter the dominance of Safaricom, the other companies have introduced a number of measures.
Airtel does not charge clients any money for sending money to all networks while Orange charges very minimal fees. On the other hand, m-pesa charges are way much higher than those charged by the competitors with rates ranging from sh 1 to sh 330.
Yesterday, Equity bank, the biggest bank in the country launched its new thin sim technology. This technology will allow customers to place the sim card on top of an existing sim card. Users of the service will be able to transfer money across all banks in Kenya for free. In addition, it will allow the users enjoy data services, SMS and calls.
The normal service of Equitel started in 2014 on normal sim cards. Safaricom responded to the new service by reducing its m-pesa charges by up to 67% and a court lawsuit on security concerns.
Other mobile money transfer services in Kenya are Tangaza and Mobikash. However, the market share of all these companies has remained very low, overshadowed by Safaricom.
“The greatest advantage safaricom has is in their agents. In every place you turn to, you will find an agent. On the other hand, other mobile money providers don’t have these agents. The only company that has the muscle to wrestle safaricom in this sector will be Equity bank which already has thousands of agents spread out in every town and village,” said Aly Khan Satchu.
Money transfer across the region are a major concern among policy makers bearing in mind that East African countries are the biggest trade partners. In the past, the most common money transfer services across the border were provided by Western Union and Moneygram. Today, transferring money using these services is very expensive.
It is against this backdrop that the governments of the East African region are toying with the idea of harmonizing the mobile money transfer charges. This follows successful negotiations among the three countries on reducing the cost of voice calls.
In Uganda, the uptake of mobile money is becoming very important with the 4 main telecommunication companies upping their game in the sector. The 4 companies are: MTN Uganda, Airtel Uganda, Africell, and Uganda Telecom. In the country, the charges are still regarded as being very high with MTN Uganda charging Ush 500 for a transaction of Ush 500.
In Zimbabwe, the country’s largest mobile money transfer company reduced the total amount to send money in 2014. In the new strategy, customers in their network are now able to send money for free.
It is estimated that the level of mobile money will increase and at a large extent result in huge cost savings. A report released earlier this year indicated that Africa could save more than $1.5 billion dollars up to 2019.