Safaricom signs M-Pesa Mobile Money deals with Uchumi Supermarkets and Naivas

Telecoms

Safaricom has started to target high turnover retail chains business using its money transfer service, M-Pesa with its latest deal with Uchumi Supermarkets. The deal, which will enable Safaricom's subscribers to use the M-Pesa service to buy goods from two of Kenya's leading retail chains was signed last Friday, deepening the country's foray into the era of cashless transactions.

The partnership involving Uchumi Supermarkets, which is Kenya's second largest retail chain by annual turnover, and fourth placed Naivas deepens the mobile money transfer platform's transformation into a key electronic commerce tool with the potential of upsetting the cash-based transaction system that currently dominates the country's commerce.

"Our aim is to bring about a situation where M-Pesa subscribers will leave home with money in their M-Pesa accounts and not need any other form of cash to transact during the day," said Michael Joseph, the outgoing Safaricom CEO. "This is only the beginning of a new revolution because we also plan to sign up petrol stations, restaurants, hotels, and chemists as M-Pesa Buy Goods partners," he said.

The move comes at a time when Safaricom's main income earner - sale of airtime - is under severe pressure from a fierce price war that has seen calling tariffs drop to rock bottom levels in the past two months.

Safaricom's signing up of more retailers is hinged on the expectation that use of the service by the estimated 12.5 million M-Pesa customers will boost the company's top line, and help scale down its reliance on voice calls as the main revenue earner. Joseph said the service will initially be free, but will later attract charges.

The Uchumi supermarket's chief executive, Jonathan Ciano said about 20 million shoppers visited Uchumi's stores last year, an indication of the high revenue potential based on the low-margin, high volume pricing model. In the year ended June 2010, shoppers at Uchumi spent Sh9.6 billion. As a listed company, Uchumi is the only supermarket in Kenya that publishes its annual accounts.