Safaricom has made a debut entry into the global digital economy after announcing the firm will be going live on M-PESA -Paypal transactions, a move likely to see their revenue on diaspora remittances increase.
Latest Central Bank data shows that total diaspora remittance to the country as at December 2017 stood at Sh196.95 billion.
“Also, having partnered with TransferTo, users can send and receive money from/to abroad,” Safaricom's Director for financial services Sitoyo Lopokoiyit told the Star.
TransferTo is said to be the technology partner in the deal. It operates a global Cross-Border Mobile Payments Network for emerging markets.
This new partnership also means that M-Pesa account holders will now be able to purchase and, pay for goods and services from international eCommerce platforms and other online businesses.
Prior to this, Paypal users had to look for Equity Bank account holders with Paypal accounts to make a transaction, an activity that led to the rise of brokers who charged higher commissions.
Lopokoiyit added that once a transaction has been carried out, it will take a maximum of three days and a minimum of two hours for it to reflect in ones account depending on the value of transaction.
Blow to Equity
On market trends, the deal is likely to be a blow to Equity Bank which has dominated the Paypal transaction market in the Country since 2013.
Compared to Equity Bank, the M-Pesa -Paypal transactions services will be available through the 148,000 M-PESA agents against the estimated 260 Equity Bank Branches across the country.
However, the Bank allows higher transaction volumes of above Sh505,000 that can be withdrawn for a one per cent charge keeping it ahead of the telco which allows upto Sh140,000 M-PESA-Paypal transaction for a three per cent withdrawal charge , and four per cent top-up charge.
The banks data for the first quarter of 2017 shows that their number of PayPal users increased by 47 per cent while the online payment system accounted for about 70 per cent of its Diaspora banking revenue.
“M-PESA’s cooperation with PayPal will open up global market places and the global economy to millions of Kenyan-based businesses and individuals...it ushers in a new era of speed and convenience beyond borders,” Safaricom Director of Strategy Joseph Ogutu said.
Paypal General Manager for the Middle East, Africa and Russia Efi Dahan said in a press statement, the online payment system is leveraging on this partnership to take advantage of the growing eCommerce industry in the country.
In November 2017, Safaricom entered the eCommerce sector with the launch of Masoko to rival Jumia and Kilimall who have been leading.
Last week, Locally owned Orion Online Mall became the latest player to join the sector after investing Sh30 million in the platform.