Yu' joins in the race for mobile payment services in Kenya

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Kenya's fourth telecoms service provider, Yu, has rolled out an electronic money transfer service, which is expected to intensify the battle for control of the mobile cash market that has been the turf of market leader Safaricom and Zain.

Yu, the latest entrant into Kenya's mobile telephony market, has introduced yuCash, promising consumers greater efficiency, affordability and access to online shopping.

It will be offered in partnership with Equity Bank - Kenya's biggest bank by customer base. Like Safaricom's M-pesa and Zain's Zap, yuCash users will be offered a secure platform to send and receive money as well as top-up airtime.

Kunal Ramteke, the Essar chief commercial officer, said yuCash enables subscribers to shop online using on-line retail platform Obopay's interface. Customers will also be able to pay bills and purchase goods and services from small businesses.

"yuCash displays a host of unique features that enhance subscriber experience over and above sending and receiving money," said Mr Ramteke.

Besides regular updates with every transaction, yuCash users will get a complete record of their transactions every month -- eliminating the need to keep manual records.

Yu's entry into the mobile money market takes the two years old firm to the frontline of competition in the telecoms industry where the market leaders have been slugging it out for the estimated Sh2 billion revenues. People familiar with the project say Essar is establishing a national network of agents to drive the business after its official launch next week.

Safaricom has more than 12,000 agents in Kenya and in the UK, where it recently launched an international money transfer service. Zain has a network of 6,000 agents in Kenya. Essar wants to recruit 3,000 agents between now and March next year and has lowered the mandatory deposit for its agents. Potential agents are required to pay only Sh50,000 in deposits half the Sh100,000 that Safaricom and Zain demand from their agents.

Yu said it was going into direct dealership agreements with the agents and will not allow sub-agents who have denied thousands of entrepreneurs the opportunity to realise the full benefits of the business. M-pesa currently has 7.6 million users compared to Zap's 400,000. Total monthly mobile money transactions are currently valued at Sh20 billion.

Previously, Yu had an agreement with the two operators that allowed its subscribers to receive money from either Zap or M-pesa but the latest move now means that they too can also send money using their lines.

Subscribers to the yuCash service will be able to transfer between Sh35,000 and Sh100,000 per day.

Analysts say Yu is likely to face challenges that are similar to the hurdles it had to confront while recruiting airtime dealers two years ago. The telecoms firm found it difficult to recruit agents in market where the two incumbents -- Zain and Safaricom -- had established formidable footprints.

Those challenges forced Essar to forge a partnership with OiLibya, an oil marketer with a national footprint, to drive its sales. It is these challenges that have informed the mobile phone company's decision to partner with Equity Bank in the yuCash project.

Equity has a vast network of branches and wide customer base that makes it an ideal partner for the mobile money business. With over 4.1 million accounts, accounting for over 52 per cent of all bank accounts in Kenya, Equity Bank is the largest bank in terms of customer base.

The launch of Kenya's third mobile money transfer product comes nearly a year after Zain launched its Zap service and two years after M-Pesa. The three mobile money platforms use slightly different models.

M-pesa markets itself as a rudimentary money transfer service that allows exchanges of virtual money between two mobile phones, while Zap has positioned itself as a mobile commerce product that allows customers to interact with their bank accounts as well as transfer cash.

Essar hopes to differentiate its product by giving its subscribers the option of making online purchases using the Obopay link, which uses mobile phone platforms to facilitate convenient electronic money transactions round the clock. It offers a broad based service that seeks to address the needs of consumers and businesses around the world.

Obopay's model can be used on all mobile phones, a factor that has drawn mobile manufacturer Nokia to partner with it in the mobile money transfer service it plans to launch in the coming months.

"Money transfer is a big business opportunity in Africa - the continent with the largest unbanked population. We will ensure that this innovative platform grows across the continent," said Jayant Khosla, Essar Group CEO for Africa. Khosla said Essar was seeking strong partners who had the ability and capacity to support continent growth for the product.

Demand for mobile money products is said to be highest in emerging markets such as Kenya, where millions of mobile customers that have never had access to banking services are able to access financial services using their handsets.

Studies show that mobile operators are uniquely positioned to introduce the unbanked to financial services ranging from micro-credit loans to person-to-person (P2P) transfers, and remittances from migrant workers to their families at home.

"Despite its potential, the mobile money market today remains so far largely untapped. However, the challenge is how to make a profit from these services. The target market is largely made up of individuals with little in the way of financial resources and they cannot afford large transaction fees to support the development of the services they need," the report says.

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