Kenya’s biggest mobile money service M-Pesa is going global in a deal with Western Union that would allow users to send money all over the world. M-Pesa’s over 23 million active subscribers in Kenya will also be able to send and receive money through their phones and be connected to WU’s 500,000 global agents. Safaricom, which runs M-Pesa, said transfers through bank accounts to Germany, the United Arab Emirates, and the United Kingdom will also be available, with services to bank accounts in other countries being rolled out in the coming weeks. Started 11 years ago as a platform for texting small payments between users, M-Pesa has grown into a service with subscribers in 10 nations across Africa, Europe, and Asia. In Kenya alone, it has 160,000 agents and did over 580 million transactions in the three months ending June 2018, according to the Communications Authority of Kenya. Its growth has had wider implications for financial inclusion and digital banking, showing banks that mobile money presents an opportunity to increase payments income as well as earn interest on increased deposits. M-Pesa grew so big and so fast that regulators once mulled over splitting it from its parent company—but later backtracked on that proposal. But as the service grew in numbers, Safaricom’s CEO Bob Collymore in 2016 called M-Pesa a “clumsy” product that was “far from elegant” when stacked up against other tech products. And so began a process of innovation, one that could stave off competition, help Safaricom diversify its products, widen its mobile and fintech network, and put M-Pesa into the hands of many more users. In the last few years, the company launched the ride-hailing service Little, an e-commerce platform Masoko, and a music streaming service Songa, which all allowed users to pay for services via M-Pesa. Last October, the operator also launched M-Pesa 1Tap, which used a card, phone sticker or wristband device to allow for secure and faster payments. In February, Google enabled M-Pesa payments on its app store, making the US tech giant one of the first among global digital distribution sites to adapt to mobile money. In April, Safaricom partnered with PayPal to allow e-commerce businesses to seamlessly transfer money between the two services and into their mobile wallets. The company launched Bonga chat service which let M-Pesa users talk while sending and receiving money. And in a bid to boost its numbers, Safaricom is reportedly taking M-Pesa to Ethiopia, a market of over 100 million that is slowly opening up to investors. The deal to take M-Pesa global also boosts Western Union which has faced tough competition from fintech startups like TransferWise and WorldRemit that offer cheaper and faster online transfers—forcing the company to cut prices and shift to a digital strategy. Quartz
