In April last year, Safaricom, Airtel and Telkom Kenya launched merchant interoperability on their mobile money networks as an industry-led initiative to ease the cost for subscribers transacting across networks.
The partnership dubbed Till ni Till allows customers on Airtel Money and T-Kash to make payments to any of Safaricom’s Lipa na M-Pesa Till numbers or paybills in what was also anticipated as a step towards breaking M-Pesa’s dominance.
However, data from Safaricom’s latest financial results indicate that the wallet-to-wallet interoperability platform launched by the three telcos last year is struggling to break the hold of M-Pesa among subscribers.
The value of transactions through the merchant interpretability platform stood at Sh1 billion recorded from 69,400 merchants for the year ended March 2023.
This is a fraction of the total value of customer-to-business (C2B) and business-to-business (B2B) payments which stood at Sh6.5 trillion.
The slow uptake of merchant interoperability in the first year of the partnership indicates that Airtel Money and T-Kash are still struggling to grow market share in the lucrative sector despite regulatory interventions.
Last year, the Central Bank of Kenya (CBK) welcomed the move by the operators to launch a single payments wallet terming it the first step towards lowering cross-network payment costs for subscribers.
“The lack of full interoperability has increased the complexity, time and costs associated with making payments,” stated the CBK.
“Without merchant interoperability of mobile money services, customers were forced to use alternative payment methods, including making transfers across networks, when making payments to merchants that are on different networks.”
The CBK was responding to growing calls by Airtel Kenya and Telkom that M-Pesa’s dominance on the mobile money network gives Safaricom an unfair advantage and that introducing interoperability would be levelling the playing field.
Data from the Communications Authority of Kenya (CA) indicates that the value of customer-to-business transfers on M-Pesa stood at Sh1.3 trillion in the second quarter of the 2021/2022 financial year.
This dwarfed payments made on Airtel and T-Kash which stood at Sh1.3 billion and Sh86 million respectively over the same period of time.
In 2021, Airtel Kenya told the Senate Committee on Communication, Information and Innovation that regulators should fast-track agent and merchant interoperability and make it mandatory through the National Payments System law.
“This will allow customers of one mobile money platform to make payments directly through merchants in another mobile money platform,” stated Airtel Kenya in submissions to the Senate.
“The advantage is that it will ensure seamless movement of payments between Mobile money platforms and merchants irrespective of the platform hosting the merchant account.”
Airtel said the industry tradition where each service provider holds their separate floats was cumbersome for agents and a drawback for consumers.
“Currently, float for each provider such as M-Pesa float, Airtel Money float, Equitel Float and T-Kash float is held separately,” stated the firm.
“This is cumbersome for agents and due to M-Pesa dominance, the agents end up underfunding the float for smaller mobile money players like Airtel, and discourage consumers from transacting with Airtel Money.”
The low uptake of merchant interoperability further indicates that Airtel Money and T-Kash are struggling to grow the number of subscribers on their respective mobile money networks.
The Communications Authority of Kenya, CA has since stopped publishing industry numbers for mobile money services per operator. Statistics however indicate that Airtel Kenya and Telkom reported 277,143 and 249,754 active subscribers respectively, and 22,197 and 9,058 mobile money agents respectively as at June 2021.
Last year, Telkom Kenya CEO Mugo Kibati said the telco was revamping T-Kash as one of its pillars in a turnaround strategy for the business following the collapsed merger with Airtel Kenya in 2020.
“We have decided that we are going to ramp up and enhance our mobile money product T-Kash which we relaunched robustly,” said Kibati during an interview. “We will be integrating our T-kash service to as many merchants and financial service providers as well as launching an app that will make it even easier to use,” he said.
The recent performance indicates that mobile money interoperability is likely to suffer a similar fate as number portability launched in 2011.
The feature that allows users to migrate from one network to another while retaining their mobile numbers was introduced by the CA at the behest of other operators as a remedy to Safaricom’s market dominance.
Twelve years down the line, the number of subscribers who have migrated is negligible, averaging 300 in the first quarter of 2021.