The upcoming Telkom Money will also go nowhere

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  • 3 years ago
  • Posted: July 13, 2017 at 2:48 pm

Orange Money is no more, this is because Telkom Kenya discontinued the platform; being one the changes the teleco made when it rebranded from Orange to Telkom Kenya. One of the reasons provided for the discontinuation, as reported by The Standard, was that Orange Money “was a basic one that lacked many functionalities, making it uncompetitive.” In the place of Orange Money, Telkom Kenya now plans to launch a new platform that would probably be called Telkom Money.

In the article by the Standard, it is reported that the new Telkom Money will be more versatile, incorporate additional functionalities, and more importantly allow for other providers to link to the new system. “What we are looking to have in place is a system that is more open and flexible to other providers and system that has the best technology that will be simpler to use for consumers” said Chief Executive Aldo Mareuse in an interview.

But it there is a very slim chance that the yet to be launched Telkom Money will perform any better than the already discountinued Orange Money. This is because, for some reason, Kenyans have decided to cling to MPESA as their only gateway for sending and receiving mobile money across the country.

In the recent years, Airtel and Orange put forth fights intended to allow for the expansion of their mobile money businesses, the fights of which they somehow won – but lost. For example, the telecos introduced the now infamous price wars, where sending and receiving money via their respective platforms was more affordable compared to doing the same transactions through MPESA. Sending money through Airtel money, for instance, is free of charge.

When the price wars did not bear fruits in terms of increased customer base and market share, the telecos called for the regulators (CA and CAK), to allow for sharing of mobile money agents. Initially an MPESA agent was not allowed to provide Airtel Money or Orange Money services, but the regulators demanded that Safaricom open up its agents as a condition for buying the Yu infrastructures. Safaricom had to oblige.

Lastly, Airtel and Orange pushed for cross platform interoperability of the different mobile money services, a demand that Safaricom also agreed to. There is one last demand where Safaricom was asked to shelve MPESA off as one of the its products and launch it as a separate company, a decision that will be arrived at once a study commissioned to find out if Safaricom is a dominant market player has been finalized.

Despite all the attempts to fight Safaricom from those various angles, Airtel reported that it had lost 74% of its mobile money customers in a span of three months. According to quarter statistics for November to December 2016 released by Communications Authority, Airtel had 6.7 million mobile money customers, a figure that dropped to 1.7 million in the January to March 2017 data. In the period of January to March, the mobile money sector moved more than shs 1.2 trillion, yet Orange Money managed to move Shs 125 million only.

Equitel, a product that was launched by Equity Bank once Equity Bank and Safaricom became enemies, has been trying to perform a little bit better, but the Equity Bank’s mobile money service also registered poor performance when it had to report a decline in Equitel’s customer base. The only mobile money platform that seems to have some hope is the PESA Link, a cross bank mobile money platform that promises to do away with cheques. This platform is however restricted to the banks hence may not be useful to the millions of telecos subscribers who have no bank accounts.

It is therefore obvious that no matter what the telecos and the banks do to take a chunk of MPESA’s controlled mobile money market, the mobile money users will still stick with MPESA, with the reasons for that loyalty not being clearly understood. A few theories have been put forth as to why Kenyans stick to MPESA despite the high costs. One such theory is that whoever wants to take on MPESA must be willing to pay better commission to the mobile money agents, more commission than Safaricom is currently offering.

If Telkom Money comes with better commission proposal for the existing MPESA agents, then the agents would be willing to add Telkom Money into their business portfolios. However, a better commision from Telkom Kenya would mean that they charge even more for the Telkom Money transactions, and charging more would mean very few people subscribing to the new mobile money service.

If Telkom Kenya opts to offer friendly transaction rates to subscribers, then the teleco would not be able to offer sufficient enticements to mobile money agents, and once there are no enough mobile money agents across the country, then subscribers will have no reason to opt for the Telkom Money.

I am not sure how anyone can acquire money money agents without increasing the mobile money transaction fees, and since is such an impossible situation to circumvent, I am not seeing Telkom Money, or whatever they will call it, going anywhere.

What is your opinion on the topic?
Odipo Riaga
Managing Editor at KachTech Analytics Ltd
Film Director, Tech and Business Blogger, Chess Player, and Photographer. God is Science.
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