MISTRUST between mobile operator Safaricom and Equity Bank could have strangled the first mobile phone banking and savings platform called M-Kesho, a new book on the history of M-Pesa reveals.
The authors of Money Real Quick: Kenya’s Disruptive Mobile Money Innovation state that both Safaricom and Equity wanted to benefit from the new service on a 50-50 basis. The book suggests that though detailed talks were held prior to the launch of the service, the two companies did not clearly agree on the profit sharing formula.
There was also an issue with double charges for those who were transferring their money from Equity accounts to MPesa and for withdrawal. “This double charge turns a potentially breakthrough product, one that could literally bank the previously unbanked, into a clunky product seemingly grafted together by two companies with deep suspicion of each other,” says the book in part.
The book authored by Nicholas Sullivan and Tonny Omwansa was released last week. M-Kesho allowed people with no history of banking to open a savings account at Equity and to use M-Pesa transaction records for six months as a credit history source to borrow. After the launch of M-Kesho, Equity launched similar products with Safaricom’s rivals yU and Orange further complicating the relationship.
“There was a lot of suspicion between the two companies,” former Safaricom chief executive Michael Joseph says in the book. “The revenue we made on MKesho had to be 50-50...if they made more than we made, we had to get another pricing formula.” M-Kesho has since been replaced by M-Shwari, a partnership between Safaricom and Commercial Bank of Africa. Kenya Commercial Bank also runs a mobile banking platform known as MBenki.