Ever since Safaricom introduced MPESA in 2007, the biggest headache it has had is people performing MPESA transactions at MPESA agents’ shops without producing National IDs. This headache increases in magnitude when the transaction in question is deposits, as many prefer to deposit right into a recipient’s MPESA account thereby denying Safaricom a much needed revenue source. Sending MPESA to the recipient, a preferred option for Safaricom, has its cost implications, making several MPESA users to prefer the direct deposits. This is why Safaricom has of late tried to implement a number of measures to deter people from depositing money directly to others.
The measures Safaricom has come up with are: 1. Making it impossible for MPESA deposits to go through if the phone to receive the deposit is not within the MPESA Agent’s premises, and 2. Requirement that an MPESA Agent must input the depositor’s ID number into the Agent’s phone before the agent can send the deposit request to MPESA servers. Though the latter restriction is mostly aimed at ensuring depositors produce their ID numbers, the real reason is just like the reason for the first restriction; so that depositors don’t deposit directly into recipients accounts as Safaricom must be have reasoned that people hardly know other people’s ID numbers.
But that’s a very shallow reasoning. If I wanted to deposit directly into your account, I could first ask for your ID via call/text/WhatsApp, then present that ID to that MPESA Agent who doesn’t mind making that direct deposit, just as I did a few days ago. It is at the point of making that direct deposit that I got inspired to write this article.
You see, Banks don’t care whether Bob sends money to Alice via any of the available Bank to Bank transfer options, or walk into a Bank branch and deposit directly into Alice’s account. This is because Banks have learned to rely on withdrawal charges and interests on loans as their main source of revenue.
The same model could be adopted by Safaricom where Bod doesn’t have to pay a cent on sending money. Instead, the recipient could be charged a slightly higher fee to cater for the charges Bob could have incurred if he were to be charged.
For example, right now, Sending MPESA worth Kshs 10,000 costs Kshs 85, and Withdrawing the same is Kshs 110. The total charges therefore comes to Kshs 195. Now, why can’t Safaricom make sending MPESA worth Kshs 10K free but withdrawing it be Kshs 195?
Safaricom could be arguing that splitting the cost to both sender and recipient makes sense, as every party ends up sharing in the cost – but this argument is total crap; total crap because in Kenya we have the phrase, “utume na ya kutoa“. That is, the sender, in most cases, still incurs both the cost of sending and withdrawal – and he will still incur that even if the total cost was lumped into withdrawal.
If Safaricom did away with sending fees, and even went ahead to encourage direct deposits into recipient’s MPESA accounts, then the repercussion would likely be increased MPESA transactions, hence increased revenues for the teleco, even if at the end the charges on MPESA is slightly reduced. Increased transactions will likely come from the fact that people will be more willing to send or deposit money to recipients, as according to the sender, there won’t be a cost associated with doing that transaction.
Safaricom may not want to believe me, but I would ask them to look at Pay Bill vis a vis Buy Goods both under Lipa na MPESA. If they look at their data, they will see that Lipa na MPESA has become a more popular option for MPESA users, and this is because almost all Lipa Na MPESA till numbers do not require customers to pay anything when paying for goods/services bought – whereas the merchants are charged a reasonable percentage for the transaction.
So, the technological costs associated with barring people from depositing money unless their phones are inside the MPESA Agent’s premise, or the time wasted when an agent has to enter a depositor’s ID number into the MPESA’s USSD prompt, is a total and complete waste of time and resources – and that’s why I say Safaricom is stressed up for NOTHING; sending MPESA, it were free, could have saved them a lot of time and money.