All you need to know about profitably running Kenya's largest mobile network money service, M-Pesa outlet

Its low capital to get started coupled with fairly simple technical skills required to master the business has seen almost every Kenyan want a piece of it.
According to the Communication Authority’s quarter one report, 22.7 million out of the 28 million mobile money subscribers are M-Pesa customers.
BISSA spoke to a successful M-Pesa outlet owner who knows too well the challenges and pitfalls that come with running the mobile money service business.

Operating an M-Pesa shop is one of the most profitable businesses in Kenya today.

Its low capital to get started coupled with fairly simple technical skills required to master the business has seen almost every Kenyan want a piece of it. M-Pesa shops clad in their trademark green colour are now everywhere, on every street corner.

M-Pesa is a mobile phone-based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania.

According to the Communication Authority’s quarter one report, 22.7 million out of the 28 million mobile money subscribers are M-Pesa customers.

So if you are interested to open an M-Pesa shop here is all you need to know about starting and profitably running the business.

The ABC of starting an M-Pesa business

To operate an M-PESA shop as an agent, you need to have a registered limited company in business for at least 6 months and have at least 3 outlets ready to offer MPESA services.

You also require a minimum investment of Sh 100,000 ($1000) to act as M-Pesa float.

You will then need to provide Safaricom with business permits for each of the M-Pesa outlets, VAT & tax certificates, Identity Cards, banking license from a reputable financial institution and police clearance certificates.

You will also be required to fill in the MPesa agent head office application form and the M-Pesa agent store application form.

Once you have submitted your forms and met all the requirements you will be given a till number that you will use.

Two ways you can run an M-PESA outlet

Standard outlet

This is the most recommended outlet since you have to go through the complete process above and be registered as an agent.

As a sub-dealer

Operating as a sub-dealer is much more affordable than registering as an agent. However, you will need to work under a licensed agent by buying their MPESA line and paying them a commission for using their lines. For sub-dealers, you only need a float of Ksh.20,000 – Ksh. 40,000.

How to run an M-Pesa business profitably

Due to its low capital and basic skills required to open an M-Pesa shop, the business is flooded and hence very competitive.

That, however, does not mean one cannot register massive profits at the end of every day, in fact, it all depends on how you run your business.

Alex Maina, an office driver with Ringier Kenya and a budding entrepreneur who has been operating his M-Pesa shop located in Baba Ndogo, in the outskirts of Nairobi for five years knows too well the challenges and pitfalls that come with running the mobile money service business.

#1. Location

The importance of location in business has never been truer like profitably running an M-Pesa outlet.

“The first thing you need to understand about running an M-Pesa business profitably is location, location and location, where your M-Pesa shop is located matters a lot because as you know this business has a lot of competition so make sure you locate your M-Pesa shop where there is high human traffic. You can have two business people one with an M-Pesa business boosting of Sh1000,000 float and another one with just Sh200,000 and still find that the one with less capital is laughing all the way to the bank at the end of every day while the other one is miserable and has only served five clients the whole day, the main difference is because one shop is located in a desirable location,” said Alex.

#2. Always have enough cash

It is really hard to shake off a customer’s perception about a certain product or service once they have had a few experiences and the same is true of an M-Pesa business.

“Never turn away a customer because you don’t have money, always ensure you have enough float in your phone because customers will start avoiding your shop and begin associating it with lack of money, once that is etched in their minds some will even prefer walking 5 miles to another shop while yours is wide open. The secret here is let's say you have Sh200,000 make sure you have Sh100,000 in your business phone and Sh100,000 in cash so that customers who want to withdraw cash can do so without any problem at all and similarly those who want to deposit cash can also do so, once you begin doing these you will have loyal customers,” Alex explains.

#3. Be wary of where your shop is located and be on the lookout

M-Pesa business comes with many risks, chief among them the danger of being a prime target of robbers and thieves since they know you handle a lot of cash.

Tales of businesses raided by thieves just as they were about to close and ready with the day’s cash are but too common.

Alex has some words of advice to prospective and veterans alike.

“Security is paramount in this business because you are always a target since you have ready cash so to minimize this risk ensure your business is located in a safe and secure neighbourhood. One also needs to be extra vigilant while dealing with sly customers who come with fake money and exchange it for genuine cash at your loss,” Alex adds.