KENYA:Mobile money agents apprehensive of new Equity Bank service

Bedah Mengo

Mobile money agents in Kenya fear loss of business once a banking institution rolls out a cheaper cash transfer service.

The agents belonging to Safaricom (M-pesa), Orange (Orange Money) and Airtel (Airtel Money) are anticipating a drop in business as consumers will troop to the cheaper service offered through thin SIM card technology.

Agents of Safaricom, which controls over 95 per cent of the mobile money market in Kenya, will be the worst hit.

The new service is to be offered by Equity Bank through its subsidiary FinServe.

The bank has already received regulatory backing from Central Bank of Kenya and Communication Authority of Kenya and is readying to start the service.

There have been several attempts to block the use of the thin SIM technology in Kenya with opponents citing security concerns.

Equity Bank CEO James Mwangi said the institution would charge transaction fees of 1 percent on all mobile money transactions.

Presently, to send and withdraw at least 11.4 dollars costs 0. 59 U.S. dollars.

On the other hand, one pays 5 dollars to send and withdraw between 574 dollars and 795 dollars.

The low fee to be charged by the new entrant is what is causing worries to mobile money agents.

Their fears are exacerbated by the fact that Kenyans are eagerly awaiting the roll-out of new service.

"If the excitement that has gripped consumers is anything to go by, then we are going to lose business in a big way.

"Nearly every customer who is coming here to deposit or withdraw money is talking about the new service," Martin Bosire, a mobile money agent in Komarock estate on the east of Nairobi, said on Sunday.

Some of the customers have even assured him that they would flee once they get the thin SIM cards.

"The other day one of my loyal customers told me that he had already enrolled to be given the SIM card and it is just a matter of time before he ditches me," said Bosire.

Bosire who has two mobile money shops in the estate gets a commission of at least 561 dollars every month.

"I have struggled to create a group of loyal customers who came here regularly to send and withdraw money, enabling me to get good commission but all this is now at stake."

Bosire’s fears are real. Equity Bank has about 8 million customers, the largest in the East African nation.

Most of the bank’s customers are in the middle and low-tier income category.

To build its customer base, the institution subsidized the cost of its services, making them affordable to millions of unbanked Kenyans. It is this model that it is extending to the mobile money sector.

"It might take time for the new service to pick up, but what is certain is that it will eat into our market," said Dorcas Mueni, a mobile money agent in Nairobi city center.

Mueni makes up to 450 dollars in commission from mobile money services, which she offers alongside selling women shoes and attires.

However, the businessperson is not very much worried about the new service as some of her colleagues, as she already has a plan to keep herself afloat.

"Safaricom has allowed us to offer services of any other operator.

"I will apply to offer services of the new player so that I can forestall loss of income," she said.

The new thin SIM card will be attached to the existing ones, saving mobile phone users need to buy a new phone.

SOURCE:COASTWEEK.
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