14 September 2012

Kenya: Safaricom to Fully Control M-Pesa Link

Safaricom is preparing to takeover the running of the M-Pesa platform from its parent company, Vodafone Group, in about two years time. This will see the public company save a considerable amount of money which it currently pays for maintenance and operation in addition to the royalty fees.

This financial year alone Safaricom will pay Vodafone up to six million Euros (approx.Sh650 million) in participation fee. In the last financial year, it paid four million Euros (Sh436 million) for the same. Safaricom Chief Executive Officer, Bob Collymore said, "The next generation of M-Pesa technology platform is going to be here".

"As soon as we build capacity here... this is in about 18 to 24 months," Collymore told the Star on the sidelines of the company's annual general meeting. Vodafone's MD for mobile payments and former Safari com CEO Michael Joseph said it will keep paying the management fee until then

Joseph added that even when technology is moved, Safaricom will continue paying the licence fee to Vodafone which owns the mobile money solution. The licence fee is based on the number of active subscribers and is capped at 25 per cent of the revenue with a minimum of 10 per cent of the revenue payable on a quarterly basis.

With over 15 million subscribers,M-Pesa is one of the main revenue earners for Safaricom, as well as its a major customer retention product for the company. Last financial year, M-Pesa earned Safaricom Sh16.9 billion, an increase of 43 per cent over the previous year. it currently transacts about sh 2 billion daily handling about two million transactions.

With the heavy traffic, it sometimes has outages and also maintenance breaks Collymore said about Sh10 billion has been put in modernizing M-Pesa Network in the last couple of months. He admitted there has been increased cases of fraud activities which has been consumer to consumer, not from the network.

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