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Safaricom goes after payment cards, targets SMEs with "Lipa na M-Pesa"

Dennis Mbuvi | June 25, 2013
Safaricom on Monday hosted the press and a section of their enterprise clients to the relaunch of M-Pesa payment solution, dubbed "Lipa na M-Pesa".

Safaricom on Monday hosted the press and a section of their enterprise clients to the relaunch of M-Pesa payment solution, dubbed "Lipa na M-Pesa". M-Pesa is heavily used in Kenya, by the end of 2010, two-thirds of Kenyans above the age of 15 years were using mobile money.

The country had a population of just under 40 million with about 23.1 million people aged 15 and above in 2010. In June 2010, Safaricom announced that it had 10.2 million M-Pesa users, who have now grown to over 17.1 million in three years. Safaricom is now looking to make more out of these users with its revamped payment service dubbed "Lipa na M-Pesa". 

Every month, KSh. 70 billion is transferred between M-Pesa users on average. Launched six years ago on March 6, 2007, M-Pesa has seen KSh. 2.3 trillion transferred between users, enough to fund Kenya's KSh. 1.6 trillion budget and have KSh. 0.5 trillion left over. The amount of money passing through the service is equivalent to 43 percent of Kenya's gross domestic product - the value of goods and services produced in a day (GDP).

The impact of the service is hugely felt across the country. Safaricom CEO, Bob Collymore, proudly quotes Central Bank of Kenya(CBK) figures that show financial inclusion (number of people with access to some form of banking) in Kenya stands at 80 percent, a figure which drops to 23 percent without M-Pesa.

In 2006, 40 percent of the population were using other people (hand to hand) for money transfers while 20 percent used buses. This currently stands at 32 percent for hand to hand and 9 percent for bus.

The number of women using M-Pesa has increased from 38 percent in 2008, to 44 percent in 2009 and 51 percent in 2010. At the launch held at the Michael Joseph Centre, named after Safaricom's first CEO, who currently heads the M-Pesa unit at Vodafone, Collymore narrated how current Nairobi Governor, Dr. Evans Kidero, then Mumias Sugar company CEO, signed an agreement with Safaricom in 2008 to pay salaries via M-Pesa.

The money was sent to the workers' wives at home, which enabled better financial management. Before, Collymore says the wages would be spent in a day, repaying items bought on credit through the month, with the balance spent in drinking joints.

Safaricom has had a "Pay Bill" feature for a number of years, where users could conduct various services such as pay their electricity and water bills and even repay their university loans. The service had a fee charged on the users for each transaction.

At an Institute of Certified Public Accountants of Kenya (ICPAK) financial services conference,CBK governor, Professor Njuguna Ndung'u remarked that  95 percent of all financial transactions in Kenya were cash based, of which 70 percent of non cash-based, transactions were handled by M-Pesa.  Safaricom is now looking to grow M-Pesa beyond peer to peer money transfer to a service that enables Kenyans to pay for good and services from their phone.


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