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NEWS & CURRENT AFFAIRS

The Nairobian

MobiKash gains a million as Airtel, yuMobile mobile money users dip

News

By Moses Michira | Nov 01, 2014

Speaker of the Senate Ekwe Ethuro (centre) buys foodstuff at a Kiosk using Mobikash merchant payment service during launch in May. Looking on is Mobikash CEO Duncan Oduor. [PHOTO: ANDREW KILONZI/standard]

Nairobi; Kenya: MobiKash Afrika has reported a five-fold growth in subscribers on its mobile-based money transfer system in the last year, on a march that could challenge established cashless payments platforms like Safaricom’s ‘Lipa na M-Pesa’.

The trend could embolden Equity Bank, which has in recent weeks, launched an independent mobile money transfer and payments platform but amid stiff opposition from established players, especially Safaricom. Communications Authority of Kenya, in its latest statistics, has reported that Kenyan-owned Mobikash had grown its subscriptions to 1.2 million by June, gaining about 1 million users over the 12-month period. yuMobile and Airtel lost subscribers in the period, while Orange only managed marginal gains. No reasons were given for the mixed fortunes among the mobile phone service providers, however.

But Mobikash had indicated when it launched its low-cost service that its focus would be populations in the lowest income brackets and rural areas. “We are recruiting more merchants in villages,” Mobikash Managing Director Duncan Oduor, said in the May launch. Transaction costs were capped at Sh50 for values of up to Sh100,000, and the low-cost approach seem to be paying off going by the latest statistics.

“We have a budget that will ensure we have 100,000 merchants by end of the year and 50,000 agents by end of 2014,” said Mr Oduor.

Majority stake

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Mobikash growth was the largest among the companies offering money transfer services, even overtaking Safaricom in the March-June 2014 quarter on new users – coinciding with the period when it launched its mobile wallet ‘Lipa na Mobikash’ in May. By June 2014, the firm had also grown its agent base about six-fold to 7,765. Mr Oduor was, however, not available for comment yesterday.

Mobikash may have struck the right cord with the ‘Lipa na Mobikash’ after struggling to break into the money transfer market since its initial launch in 2011. The payment solutions followed the buyout of a majority stake by another Kenyan investments conglomerate, Foundation Enterprise Programme owned by John Kithaka. Users are now able to pay bills and pay for goods at merchants outlets using the Mobikash platform, send and receive money irrespective of the network they are on.

Equity Bank, the largest financial institution in Kenya, now hopes to break the dominance of Safaricom in mobile money transfer and payments system (e-wallet), through the Thin-SIM technology in a high-stake competition between two of the largest companies in Kenya.

Superimposed

Equitel, Equity Bank’s telco brand, says it will not charge subscribers to send money on its mobile banking platform that will likely stir the market. Safaricom, Kenya’s largest operator charges its customers between Sh1 and Sh110 to send cash on M-Pesa.

Also, Equity Bank has capped the cost of withdrawing any amount at Sh25, compared to between Sh10 and Sh330 charges on M-Pesa. This could set the stage for a price war that is bound to see the cost of money transfer reduce significantly.

Unlike Mobikash that does not require customers to have a physical infrastructure, Equity’s technology relies of an actual Thin SIM card that is superimposed on the ordinary card enables subscribers connect to their network. The mobile money transfer business is estimated to transact more than Sh2 trillion a year, from where Safaricom earned more than Sh26.6 billion in its revenues last year.