Banks’ appetite for mobile money rattles Safaricom
A territorial dispute pitting banks against telecom companies is looming over control of the increasingly lucrative mobile banking industry.
The groundwork was laid when Central Bank of Kenya permitted telecom operators substantial access to banks. But attempts by banks to gain a foothold in the lucrative mobile money industry is a foray telecom firms do not want to yield to.
The move does not augur well for mobile service firms’ profits, if the ongoing tussle between Equity Bank and Safaricom is anything to go by—with the former accusing the latter of uncompetitive business behaviour. Airtel, Safaricom’s arch-rival is, nonetheless, more embracing of a partnership between themselves and banks.
The country’s second largest mobile operator entered a partnership to host Equity’s mobile virtual network operator services, Equitel, on its network. Airtel has since taken a back seat in the ongoing clash between Safaricom and Equity, despite its links with the bank.
A Safaricom insider who sought anonymity intimated to People Daily that the firm is awake to Equity Bank’s strength. “Equity Bank has a huge customer base which it is leveraging on,” he says.
Virtually all banks have launched services on mobile platforms, though only Equity is the only one with its own mobile network. Safaricom has announced higher tariffs on bank-to-M-Pesa transfers starting December, a move Equity views as one meant to discourage uptake of its Equitel mobile service, as it now becomes expensive for consumers.
The telco has been charging a flat rate of Sh33 for customers transferring cash from bank accounts to their M-Pesa accounts, or to a third party. But the new tariffs regime has made that transaction more expensive depending on the amount transferred by customers.
For instance, for amount exceeding Sh30,001 moved to M-Pesa account, one will spend Sh121, up from Sh33, reflecting a 267 per cent increase. It had effected the new tariffs last month but later shelved them and issued a three-month notice to consumers as required by law.
As a result, Equity chief executive James Mwangi has written a protest letter to his Safaricom counterpart Bob Collymore, terming the increase unfair, uncalled for and one meant to sabotage Equitel.
“Whereas it is your right to increase the charges, this is not justifiable as it threatens inter-operability, which is the bedrock of financial inclusion to which Equity Bank is committed,” said Mwangi in the letter.