Largest mobile money transfer platform MPESA faces massive reshuffle - authority

If the regulator, CA fully implements the report, then Safaricom Ltd and M-Pesa will operate as two entities with different staff and infrastructure.

 

If put to use, Safaricom will now be battling with two major impediments to its dominance in mobile money transfer, following a recent launch of Kenya Bankers Association’s PesaLink which is already gaining pace.

Last year, the regulator, CA, contracted Analysys Mason, an international consultant firm, to get appropriate legal framework for regulating abuse of market dominance.

“The two businesses would be required to operate in separate offices, with separate staff below board level, separate branding, separate accounting and separate business operations and support system, customer support systems and management information systems,” the report says, as quoted by Nation.

Fee disclosure

Last week, Safaricom moved in response to CA earlier directive to start disclosing M-Pesa fees at the end of the message preceding every transaction. Since then, customers who use M-Pesa to pay bill or transfer cash receive a notification of the fees charged for the transaction.

This compliance is one year behind the CA’s set deadline, after a directive was issued last year. In common practice, customers are entitled to a pop up message containing the transaction charges before they execute a payout.

“In the second phase, customers will receive a pop up message informing them of any charges prior to the transactions,” Safaricom said earlier in a statement.

In the final phase, the company said, will see Safaricom effect changes to its system so that users of value-added services such as M-Shwari and M-Tiba can receive similar notifications. The changes will have to be done by the end of May, in line with CA’s deadline.

The Competition Authority of Kenya (CAK) last year ordered all financial institutions and telcos providing mobile money services to begin disclosing fees associated with such services to customers. The order was meant to remedy the opacity that surrounded such fees.

Earlier, customers would rely on posters at agency shops, the Internet or simply calculate backwards based on their mobile money account balances. The Safaricom now becomes the second telecom firm, after Airtel, to begin making the disclosures.

Tight regulations

The regulator, CAK, has also shown particular interest in regulating the mobile money business, dominated by Safaricom’s M-Pesa.

Although the proposals by the consultants are still far from being implemented and will have to be discussed by stakeholders before being introduced, they are bound to raise concern in the Safaricom boardroom.

Report recommends higher level of interoperability in the market by December 2017 or Safaricom be forced to hive off M-Pesa into a separate company

Competition

The stability and ultimate dominance of M-Pesa faced yet another setback last week when the Kenya Bankers Association (KBA) launched PesaLink. The service, which will enable a transfer of cash up to Sh1 million, will also enable 12 local banks to interlink, denting a huge chunk of M-Pesa’s customer base.

KBA’s Chief Executive Officer Habil Olaka said that the 12 partner local banks will enable transfer of between Sh10 and Sh1 million in a move set to compete with existing money transfer services. Already the service is gaining pace in the money transfer scene.

Safaricom Limited netted in 669,594 new subscribers in the three months ended last September, hitting a new mark of 25.94 million users; despite a drop in the number of mobile users by a whopping 1.2 million.

The drop in total mobile phone subscriber base from 39.7 million reported in June to 38.5 million as at end of September 2016 was punctuated by Telkom Kenya’s revision of its customer count to include active users only, hitting Safaricom the hardest.

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