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:
- No incentive to do so today
- 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 – 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%.
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.
 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%.