M-Pesa’s Importance to Safaricom

In my last post, I made the case for a percentage-based transaction fee structure in mobile money – especially given that those conducting small transactions are hurt the most.  Now I would like to examine a few reasons why M-Pesa isn’t leading the way on lower transactions costs:

  1. No incentive to do so today
  2. Lucrative earnings for M-Pesa in current structure

First, M-Pesa is really under no pricing pressure currently to lower the transaction fees.  It dominates the mobile money landscape in Kenya with well over 13 million registered users[1] – that’s over 30% of the entire Kenyan population.

Second, M-Pesa is currently making Safaricom a lot of money.  In its last financial report (November, 2010), Safaricom reported that M-Pesa earned 5.28 billion Kenyan shillings in the first half of its fiscal year 2011.  That represents slightly over 11% of Safaricom’s total revenue for the period.  And its share of revenue is growing rapidly: in the first half of fiscal year 2010, M-Pesa’s share of revenue was just under 8% so over 1 year M-Pesa’s share of revenue increased by over 40%[2].

It will be very interesting to see how those numbers have grown since November.  Safaricom releases full fiscal year 2011 results this week and I will report on those when available.


[1] Safaricom last released M-Pesa uptake data in January so the latest figures are for December, 2010; I expect registered users are substantially higher now.

[2] M-Pesa’s revenue share in H1 FY 2010 was 7.92% and in H1 FY 2011 was 11.21% making growth of 41.5%.

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2 Comments

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2 responses to “M-Pesa’s Importance to Safaricom

  1. Larry Brennan

    Matt – This is really fascinating. I wonder if some other organization can step in and build a network with lower fees. Clearly, building a network AND getting a carrier to support it on feature phones will be a challenge.

    I really admire you for the work you’re doing, and for the leap you’ve taken in relocating to Africa to do it.

    • Thanks very much, Larry – very kind words. It’s true that it will be very difficult to do on low-end phones with a good user experience and lower cost… but it must be done.

      And I’m thoroughly enjoying the work as it’s been something I’ve dreamt about doing for a long time; thanks for reading the blog!

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