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Safaricom lines up M-Pesa for minors

BUSINESS
By Frankline Sunday | May 16th 2022 | 3 min read
By Frankline Sunday | May 16th 2022
BUSINESS
Safaricom Chief Executive Peter Ndegwa.

Safaricom is set to launch an M-Pesa service for minors as the telco moves to lock its subscriber base from an early age and guarantee future earnings from the payments platform. 

Safaricom chief executive Peter Ndegwa disclosed this during the company’s investor briefing last week but stopped short of giving more details as the product is still under development. 

“In terms of the junior account, we do not want to announce at this stage but what we have signalled is that we are working with the regulator to see how we could come up with a product that is usable to individuals who are below 18 who currently do not have a product that meets their needs,” he said. 

M-Pesa, with an active customer base of 30 million, has become Safaricom’s largest revenue earner, bringing in Sh107 billion in the year to March 2022. 

The telco, which is East Africa’s most profitable company, has embarked on an aggressive push to expand its financial services ecosystem which is centred around the M-Pesa Super App.

The App has recorded 5.3 million downloads as of March this year with more than 462,000 users downloading the Business App.

“We’ve seen significant improvement in M-Pesa usage both on the individual side in the average number of transactions per customer which have almost doubled and also on the merchant side,” said Mr Ndegwa.

Several commercial banks in Kenya have a dedicated junior account with service offerings for children and parents that include savings, fee payments and club membership, among others.   

A junior version of the M-Pesa app will be a first in the country’s fintech sector and could give Safaricom a steady pipeline of subscribers in the wake of increasing competition.     

This year alone, Kenya’s financial services regulator the Central Bank of Kenya (CBK) has issued two payment services provider licences to two firms.

The country’s fintech sector is set to witness increased activity in the near term as the regulator makes good on its promise to open up the space for more players.   

Data from the Communication Authority of Kenya (CA) shows that there are currently 64.8 million SIM cards registered in the country as of September 2021.

This is against an adult population of 26 million as of 2019, according to the Kenya National Bureau of Statistics (KNBS).

In March, the CA issued new guidelines to mobile network operators on the registration of SIM cards belonging to minors.

“Mobile service providers, in the development of age-verification mechanism, will ensure that all SIM cards that are to be used by minors shall be registered in line with the provisions in the Kenya Information and Communications Act, 1998 and the Kenya Information and Communications (Registration of SIM-cards) regulations,” said the ICT industry regulator.

CA further directed mobile network operators, broadcasters, internet service providers, ISPs and content providers to put in place policy and technological interventions to insulate minors from harm.

This includes implementing a corporate child online protection and safety policy and strategy that promotes the development of productive and appropriate products and services targeting children.

Firms dealing with the collection of personal data will also be required to implement higher default privacy settings in dealing with minors’ data like location-related information and browsing habits.

The protections will further be extended to third party agreements that the regulator says must include mechanisms to address action to be taken in the event the rights of children using the products are overlooked.

Mr Ndegwa said that Safaricom will ensure that the product is safe for use by minors and will include a provision for parental oversight. 

“It will have restrictions on what those individuals can do because they are minors and also it will have parental controls, which is one of the most important features that was not available.”

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