Mpesa takes on Banks with Mobile wallet linked Prepaid Card

Mpesa prepaid card

Mpesa prepaid card

On June 10th, Kenya’s leading mobile payments platform, Mpesa, announced it was piloting a Lipa na Mpesa prepaid card linked to mobile wallets. The card is an interesting product in a Kenya’s payment market turf wars. Banks versus a dominant Telcos, Safaricom.

According to Techweez,

“The card, mirrors a user’s M-Pesa account, meaning whatever amounts are in your M-Pesa wallet are reflected in the card. The card is NFC enabled where a user can Tap and Go at the point of checkout when making purchases for goods and services. The card is to be used at merchants for purchase of goods and services and will have its own Point of Sale System”

The card links with customers Mpesa wallet and phone service for SMS notifications.

 

What does this mean for the industry?

Safaricom now owns and controls a complete vertical, end to end: SIM card, Communication network infrastructure, cash in cash out (CICO) agents,  acquired merchants and now, prepaid card and Point of Sale.

The company, has single handedly built out a payments infrastructure comparable only to a combined Banking, card company, ATM and Merchant network.

With its own proprietary Point of Sale System, Safaricom’s grip on payment channels will only tighten. Only approved Mpesa products will work on it, just like Safaricom decides who appears on SIM card Menus.

 

What is going on?

It seems odd that a company renowned for mobile payments is taking us back to cards, even after successfully scaling mobile payments in Kenya. It speaks to its competition with Banks at merchant level and cash in – cash out point like agents.

Financial Services agency in Kenya, Kahawa West

Financial Services agency in Kenya, Kahawa West

Kenyan Banks have always been on the back foot, trying to catch up with Mpesa. Eventually they teamed up to take on Mpesa. Partnering with Visa and Mastercard, banks have swamped customers with branded debit cards. Cards let you pay at acquired merchants using Point of Sales card terminals, withdraw cash from ATMs, and cash in  or cash out at agency banking points.

In contrast, Mpesa users already enjoy all the benefits of cards, even withdrawals from ATMs via their phones. The Lipa na Mpesa card  simply expands options for its customers’ mobile wallets to include what banks offer too – card payments.

Kenyan banks combined are yet to catch up, as per the Central Bank of Kenya statistics they have:

  • lower cards issued versus Mpesa subscribers at 19 million
  • lower acquired POS merchants versus Mpesa Merchants now at 44,000 merchants
  • lower bank agents versus Mpesa’s mobile money agents now more than 83,000 agents

To be fair, it is not the first time a Telcos has got into the card payment business. Airtel launched a Airtel Visa Card in February 2014. But hey, this is Kenya, Mpesa territory.

The card is currently being trialed in an internal pilot with 1,500 of its employees using the card to pay for their meals at the company’s cafeteria.

 

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