Safaricom should consider M-Pesa fallback servers

The suspension of M-Pesa services following the collapse of servers belonging to Safaricom’s principal owner Vodafone was unfortunate.

Coming as it did at the end of the month, it severely disrupted the millions of Kenyans who operate outside of the normal banking system, and depend on the service for virtually all their secure financial transactions, including paying bills.

Since its innovation and launch, M-Pesa has been gradually integrated into the main banking system. As such it has also become an integral part of everyday banking for those with bank accounts as well.

M-Pesa and other similar services by its competitors, have become important cogs in tapping the bottom of the pyramid sector of Kenya’s financial services market, an area that was for long largely ignored by most commercial banks.

It was significant that just a few months after its launch, M-Pesa became so popular that several commercial banks, unhappy that even their core market was slipping away, initially fought to have the Central Bank place curbs on its services.

Since then, many have embraced agency banking and partnered with the service.

What is clear is that Safaricom’s board needs to think harder about a more robust fallback server for the firm’s money transfer business, even if just to protect its core East African clientele from bearing the brunt of such technology failures beyond their control.

Footprints of shoppers

Also hit hard by the suspension were M-Pesa’s biggest agents who, incidentally, are Kenyan companies. Uchumi has seen footprints of shoppers grow significantly since it became the leading M-Pesa agent in Kenya in terms of transaction volumes. Equity Bank, which is the second largest M-Pesa agent after Uchumi was also hit by the suspension of the service.