M-PESA, Easy Taxi, my1963 – Stop promoting card based payments in Kenya

Recent statistics on cashless payment in Kenya

By February 2013, majority of Kenyans, 90% to be precise, still used cash as a means of payment as reported by Business Daily. The remaining 10% used both mobile and card based payment methods. During the period of that report, that is between December 2012 and January 2013, the number of debit card holders grew by 100,000. This growth was attributed to extensive marketing by card companies such as Visa and Mastercard in liaison with the banks.

The marketing efforts that started as early as 2009 saw card based transactions increase. An executive summary in a report by Timetric that you can buy for Shs 360,000 states that, “In terms of the number of cards in circulation, Kenyan payment cards (including debit, credit and charge cards) registered robust growth during the review period (2009–2013), recording a compound annual growth rate (CAGR) of 26.32% to increasing from 3.8 million cards in 2009 to 9.7 million in 2013.”

The report continues, “In terms of transaction value, payment cards valued KES 1.5 trillion (US$18.5 billion) in 2013, after registering a significant review-period CAGR of 34.40%. The average transaction value (ATV) in Kenya was US$49.3 in 2013, which was the fourth-highest among its peer countries.”

But increase in adoption of card by Kenyans has changed, I mean dropped, and I hope the drop won’t stop. Business Daily reports,”The latest Central Bank of Kenya (CBK) data shows that card payments plunged 18.2 per cent to Shs 1.1 trillion as at the end of November 2014, compared to Shs 1.4 trillion a year earlier. In contrast, the volume of cash sent through mobile platforms grew by a quarter to gross Shs 2.1 trillion over a similar period – nearly double the value of card payments”,

M-PESA can help render cards irrelevant

A lot has been said and written about the success of M-PESA in Kenya and its contribution to making Kenya ready for a pure cashless society. The Shs 2.1 trillion mobile transactions reported by CBK for the period November 2013 to November 2014 can be assumed to be 99%+ M-PESA. But the transactions alone does not reveal much about the status of mobile based payments in Kenya. This is because most of those who receive M-PESA still end up withdrawing the cash, but recent report by M-PESA indicate that we are headed towards increased cashless payments via the platform.

Safaricom reported that 139,600 Lipa na M-PESA merchants have been recruited of which 32,300 are actively using the service. This is still a very small number compared to the millions of merchants the country has. The reason this number, although encouraging, is not good enough is because Safaricom might not have understood the full potential of M-PESA and Lipa na M-PESA in particular.

Related Articles: Lipa na M-PESA ad is misleading and There is need for Lipa na M-PESA to open up to jua kali sector

This is because Safaricom still thinks that in order to drive the adoption cashless payments faster, it needs to partner with cards operators. For example Safaricom once partnered with I&M Bank for the issuance of Visa debit cards, a partnership that can be said to have greatly flopped. Recent partnership between Safaricom and my1963 also tells us how Safaricom is confused about its Lipa na M-PESA product. What Safaricom should do is to run away from all cards based payment players and concentrate in developing its Lipa na M-PESA to effectively compete and finally override the card based payments in Kenya.

card based payments in Kenya

In the matatu industry for instance, Safaricom could court all matatu owners and convince them to use Lipa na M-PESA ONLY – in collection of the the bus fares. This won’t be as hard as trying to convince the matatus to use my1963 first, then thereafter convince the public to buy my1963 cards. If it’s Lipa Na M-PESA only, the promotion difficulty has been leveraged in the sense that almost every commuter in Nairobi and elsewhere has an M-PESA account and by default can access Lipa na M-PESA service without the need to acquire and top up additional cards or gadgets.

For the matatu to fully adopt Lipa na M-PESA in months and within the current regulatory framework, the only thing Safaricom would need to do is to invest in extensive marketing campaign – basically telling the public to start using Lipa Na M-PESA to pay for their bus fares.

If Safaricom manages to succeed in enrolling all matatus and buses into the Lipa na M-PESA platform, then targeting the other sectors of the economy one by one will not be hard.

As Safaricom embarks on recruiting merchants into Lipa Na M-PESA, it should also expedite the release of M-PESA’s API to the developers so that integration of M-PESA with other platforms such as Easy Taxi Pay is seamless. According to a news report published by TechMoran, the release of the API should be any time next month.

Safaricom should also take cognizance of the expected rapid growth of NFC based payments via platforms such as Apple Pay, Google Wallet, Samsung Pay and others potentially from Microsoft and LG that are expected to launch this year. Back in March 2014, Safaricom hinted that it would introduce NFC SIM cards meant to activate M-PESA enabling Safaricom subscribers “to buy goods or pay for a cab or bus or air ticket” on the go.” Since the publication of that news, Safaricom went dead quiet on the programme and we do not know if there is anything cooking in the kitchen.

Related: M-Pesa should stop being dumb and go smart


The world is determined to move away from card based payments in favor of smart based payments generally powered by technologies such as NFC. In Kenya, citizens have embraced mobile money and what needs to be done is for the mobile money to move from dumb SMS and USSD technologies to platforms that define the smart world. Safaricom, banks and emerging players such as Easy Taxi should help the country adopt mobile payments as the sole avenue for taking the country into a 100% cashless society.


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