KENYA: P2P transfers and payments to engender a cash-lite economy


Kenya is at the forefront of the adoption of a cash-lite economy. The country now has the world’s highest mobile money penetration rate with more than half of the adults using a mobile money platform.  Last year, more than $50 billion mobile money transactions passed through Mpesa (the first platform to launch in 2007) alone.

It is not surprising therefore that a number of financial institutions are vying for a slice of the action, with several major entries launching into Kenya's money transfer and payments market in the last 12 months. However, with so many products on offer, how can consumers decide which is the best service for them?

What’s new?

The Kenya Bankers Association (KBA) launched PesaLink in February after identifying the need for a payment and money transfer vehicle that would make it easy and fast for inter-bank and inter-person cash transfers. The service allows bank customers to send money to anyone and anywhere in Kenya instantaneously via a direct to bank service.

It also provides an enhanced proposition, which facilitates the transfer of larger sums of money in real-time allowing for the purchase of high value items such as a used car. There is therefore no need to wait for a cheque to clear, as there is a transfer of funds straight away.

From the boda boda to the supermarket

There is also MasterCard with its revolutionary Masterpass QR (quick reader code) that makes payment for goods and services almost effortless. A transaction requires a merchant to have a Masterpass QR code issued by his/her bank and customers to have a Masterpass bill payment menu on their phone. The service allows for small payments, for example, a ride on a boda boda to paying at a supermarket.

People no longer need to worry about carrying cash (nor the associated personal security risks of doing so) as their mobile phone acts a digital wallet.  

Enhancing the services available

mVisa, owned by global payments technology giant Visa, is another trailblazing entrant into this field, taking the game of money transfer and payments a notch higher thanks to innovative person-to merchant (P2M) and person-to-person (P2P) capabilities. Visa has just announced that through its strategic partnership with Ecobank, it has been able to drive quick adoption of the mVisa solutions by ultilising the pan-African bank’s platform and reach across 36 African countries.

Ecobank Scan + Pay with mVisa delivers instant, secure cashless payment for goods and services - in exactly the same way as Masterpass. Customers simply scan a QR code on a smart phone or enter a unique merchant identifying code into either a feature phone or smartphone. The payment goes straight from the consumer’s bank account into the merchant’s account and provides real-time notification to both parties.

However, additionally anyone with a Visa card can link his or her card to the Ecobank unified mobile app, to instantly send money to any Visa cardholder worldwide. This is a major innovation that serves the needs of the African diaspora who wish to send money home to Kenya, or anywhere else in the continent for that matter.  

Becoming a cash-lite economy

Undoubtedly day-by-day, Kenya is inching closer to being a cash-lite economy and continues to be a fertile breeding ground for innovative money transfer services. The winner here is certainly the consumer as the provision of safe, cheap and convenient payment tools are driving financial inclusion and the economic development of Kenya, as well as the African continent at large. Who will emerge the winners in what is becoming an increasingly crowded competitive market will largely depend on the ability of providers to combat traditional blockages to high frequency use, such as high transactional costs.

Writer is Ecobank Kenya Head of Communications