Mobile money transfer gains momentum in Kenya

By Semaj Itosno, Nairobi, Kenya

More and more Kenyans are adopting use of mobile money transfer platforms, a new report shows.

Latest data from the Central Bank of Kenya (CBK) shows that money transferred through mobile phones rose by USD 1.6 billion in the first quarter of 2012 from USD 2.9 billion sent between January and March 2011.

There are six mobile money transfer companies in Kenya, the largest economy in the East Africa, with mobile operator Safaricom being the market leader through its M-Pesa platform.

Telkom Kenya, Airtel and Yu double up as mobile phone and money transfer service providers while Tangaza and Mobikash exclusively offer money transfer services.

The value of money transferred through mobile phones rose by 55.77 per cent in the first three months of 2012 to Sh375.1 billion, as more users switched to paying for goods and services through their phones.

This means mobile phone cash transfer systems in Kenya are evolving into payments systems, offering consumers more options.

The number of mobile money transfer agents also rose to 55,726 in the first three months of the year compared to 36,198 in the first quarter of 2011.

CBK said in its annual bank supervision report that 13 banks had signed up partnerships with mobile phone providers to facilitate money transfer services for their customers and several other banks have expressed interest to introduce mobile financial services with the aim of offering better and convenient services.

The banking regulator said that there are over 18 million Kenyans using mobile phone platforms to make payments and send remittances; and over 40,000 agents facilitating transactions of up to USD 41 million per day at the end of 2011.

“A number of institutions have initiated various innovations and new products to be able to conveniently serve their customers and reduce the long queues that were previously being experienced in the banking halls,” said the banking regulator.

The amount of money transferred through mobile phones in the first quarter of 2010 stood at USD1.86 billion, having risen from USD1.08 billion in 2009, and USD 0.19 billion in 2008.

 “It is now transforming from mobile money transfer to mobile payments, soon you will be paying for goods and services such as groceries and fuel with the mobile phone,” says Michael Ghossein, the chief executive officer of Telkom Kenya, which operates Orange Money.

Companies have also begun adopting mobile phone money for payment of staff salaries. In the 12 months to the end of 2011, the value of money transferred through mobile phones rose to USD0.02 trillion from USD8.82 billion in 2010.

“There is a market out there that is not exploited and the dramatic increase in the use of mobile money is a reflection of this,” said Habil Olaka, chief executive officer of the Kenya Bankers’ Association.

In Kenya mobile money was initially introduced to fill the gap that existed for transferring small quantities of cash particularly to remote areas of the country where there was no access to financial institutions.

Commercial banks viewed the mobile money operators as competitors at first, but have now forged partnerships which are fuelling adoption of the money transfer systems.

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