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Safaricom loses battle to block Equity Bank’s thin sim card

By Frankline Sunday | September 23rd 2014 at 00:00:00 GMT +0300

Equity Bank CEO Dr. James Mwangi(R) accompanied by Mobile Virtual Network Operator Chairman John Waweru when they appeared before Parliamentary Energy Committee at Parliament on Friday 05/09/14. PHOTO:BONIFACE OKENDO
 Equity Bank CEO Dr. James Mwangi(Right) accompanied by Mobile Virtual Network Operator Chairman John Waweru when they appeared before Parliamentary Energy Committee at Parliament. [PHOTO:BONIFACE OKENDO]

Kenya: Integrated communications services provider, Safaricom, has lost the battle to block Equity Bank’s wholly owned subsidiary Finserve Africa from entering the lucrative mobile money services market using the Thin Sim technology.

This is after the regulators — Communications Authority of Kenya (CA) and Central Bank of Kenya (CBK) — dismissed Safaricom's objections to the technology.

This could set the stage for a price war that is bound to see the cost of money transfer reduce significantly, with consumers standing to be the biggest winners.

Safaricom jealously guards M-Pesa. Apart from bringing in billions of shillings for the operator, the service acts as a powerful loyalty tool. Now, with Thin SIM, that advantage could be eroded. Equity Bank has announced that it will charge a maximum of Sh25 for amounts transacted, which could be a major assault on Safaricom’s money transfer business.

CA yesterday gave their approval for Equity Bank to roll out its new service which has raised the stakes in telco industry. “The intention of the authority to license these operators is to encourage the innovation in the country’s information and communication sector that will spur competition in the various segments,” stated CA's board chairman Ben Gituku.

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Safaricom had written to the regulators stating that the overlay SIM card technology had the ability to quietly steal data from the main SIM, including the secret personal identification numbers and pass them to a third party.

Gituku said the complaints were put under consideration by both CA and CBK but later dispelled. “The two regulators have held discussions with Safaricom, Finserve and Taisys—the makers of the technology, on the matter as well as other market players and global watchdog GSMA regarding these concerns,” he explained.

“We have established that the overlay SIM card technology complies with minimum mandatory standards in manufacturing and no major complaints regarding the interception of communication on the main-SIM have been reported so far.”

The CA stated that based on the outcomes of these consultative meetings, there was no reason to block the introduction of the overlay SIM technology into the Kenyan market.

However, only Equity bank will be allowed to carry out the pilot operations of its mobile virtual network service for one year during which any vulnerability detected will lead to the suspension of the service. “The CA board has allowed the use of Taisys thin-SIM technology under strict observation for a period of one year and if any vulnerability is discovered within this testing period its use will cease forthwith,” stated Mr Gituku.

Safaricom welcomed CA’s decision but urged the regulator to fast-track the security review over the thin SIM and publish the guidelines in the interest of protecting consumers and financial institutions.


“Whereas Safaricom does not necessarily agree with some critical aspects that led to the determination of CA’s decision, we will give our full cooperation to the CA as is required,” said Nzioka Waita, Safaricom's Corporate Affairs Director. Finserve will now apply to CBK to be allowed to roll out a mobile money network.


Safaricom Equity Bank Thin sim
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