A couple of days ago, we had learnt that the CBK was in the process of compelling Safaricom’s Lipa na M-PESA product to accept payments from other mobile money products, in this case Airtel Money’t Lipa na Airtel Money and that by Telkom Kenya’s T-Kash.
“The emergence of a fully integrated ecosystem that is seamlessly interoperable is critical. A strong foundation has already been laid with the rollout of P2P [peer-to-peer] interoperability in 2018 and the industry engagement that culminated in the proposal for a single integrated solution with multiple functionalities,” the CBK argued.
However, we did not expect that the development would occur fast. Earlier information had hinted that the interoperability for merchant payments would go live sometime in 2023. This, is not the case, because the service will go live this Friday (April 8, 2022).
It is obvious that Safaricom’s M-PESA dominates the mobile money space. Even with market assessments and constant complaints from the less than significant rivals and other stakeholders that the market has been, and is still favouring all products associated with M-PESA in terms of reach, customer numbers and revenues, nothing has really been done to ensure fair competition among these players.
Less than half a decade ago, mobile money interoperability as introduced. Customers can send and receive money among M-PESA, T-Kash and Airtel Money, but that has not substantially tipped the scales to the smaller players’ favour.
Bearing in mind that Lipa na M-PESA services, which went live in 2013, have seen notable growth, the CBK, as said in the quote above, has now seen it fit to make the space interoperable.
Before we look into the details of the deal, here are some numbers according to the latest sector statistics report by the ICT regulator, the Communications Authority (as of December 2021):
|Value of C2B in KES||1.3 trillion||1.3 billion||86 million||1.307 trillion|
The numbers clearly show that M-PESA has an edge over the rivals by very big margins.
- This kind of interoperability works in the similar manner as Equity Bank’s Equity One Number. It allows merchants to receive payments from customers using M-PESA, Airtel Money and PesaLink, to mention a few. In this case, Lipa na M-PESA merchants will be able to receive payments from T-Kash and Airtel Money, and among them as well.
- Merchants are charged 0.5 percent or less than KES 200 per transaction on the funds collected under their tills. This is according to M-PESA. In contrast, banks charge more for their cards.
- Customers do not pay for Buy Goods services, save for select exceptions such as petrol stations.
- The development seeks to expand further to allow seamless transactions among all players.
- Safaricom’s merchant payments market share is at near 86 percent, undercutting the competition just like other segments.
Products such as Airtel Money do not charge customers when they send money within its network. This is interesting because Kenyans have been complaining about the high charges for M-PESA transactions. It is an issue that in the CBK’s radar too, so it is possible that some adjustments will be done in the near future.