Safaricom Launching M-PESA Prepaid Card in Kenya
Safaricom is planning to add a companion prepaid card to its popular M-PESA mobile money transfer service in Kenya—a move that could help close the “missing link” in the e-money ecosystem, while helping Safaricom compete against a new rival in the P2P space.
The card is a complement to the Lipa na M-PESA service, which enables users to make purchases directly from their M-PESA accounts by entering a special code provided by a merchant into their phones. The NFC-equipped prepaid card gives users another option to pay at the POS without having to convert funds to cash, the company said. The card currently is being piloted among Safaricom’s staff, with plans to expand the test run to university students and a wide launch “in the coming months,” according to Safaricom.
Making it easier for P2P users to spend funds without having to convert e-money to cash is key for improving the financial lives of the underbanked and poor who use money transfer systems such as M-PESA, industry experts note. Keeping electronic funds “in the system” is cheaper for consumers and leads to increased sales for merchants, according to observers. And card payments are on the rise in Kenta, with payment volume via plastic cards growing to Sh1.3 trillion (US$12.8 billion) by the end of 2015, from Sh580 billion (US$5.7 billion) five years earlier, according to the Central Bank of Kenya.
The new prepaid card also could help bolster M-PESA against competition from a just-announced money transfer service from Kenya’s major banks, which will enable P2P transfers that circumvent the M-PESA system. But with eight in 10 payments in Kenya still taking place via cash, according to Safaricom, the size of the potential market for e-payments should leave plenty of room for multiple providers to co-exist.
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