End of Road for M-Pesa Agent Business? Why Kenyans Operating Mobile Money Shops Are Losing Customers

 

It was a bright morning as I walked to the market centre to buy breakfast. First, I visited an M-Pesa shop to withdraw some cash, but I was turned off by "hakuna M-Pesa" from the stall attendant, who was busy cleaning her cosmetic products ready to sell to customers.  An M-Pesa agent recording customer transactions. Imaage for illustration.  Taking a closer look at the stall next door, it was vacant but painted with an M-Pesa shop message and colours. After crossing the streets to the other side, I spotted a shop with Lipa Na M-Pesa payment options - Paybill and Pochi la Biashara - which eased my shopping experience. I was prompted to ask the shopkeeper if I could withdraw the money since I wanted some cash to run other errands. "No, just pay using either Pochi La Biashara or Paybill. I stopped offering M-Pesa withdrawal services. The business has challenges and is not promising in terms of returns," lamented the shopkeeper. Why are many M-Pesa shops closed? Speaking to Safaricom, TUKO.co.ke learned that the M-Pesa agent earns a commission per every transaction based on the amount of money transacted. "M-Pesa commission is earned per transaction. The amount depends on the type and amount transacted," Safaricom Care explained. The company further revealed that the commission structure is reviewed by an M-Pesa SIM card administrator handling the agent. M-Pesa agent business transactions have been hit in recent years with the growth in merchant business and cashless transactions. Data from the Safaricom Financial Statements for the year 2023 indicated a slight increase of 0.1% in M-Pesa agents to 262,304, against M-Pesa customer growth of 5.2% to 32.11 million. Merchant businesses using M-Pesa to pay bills and Buy Goods services increased to 69,400, with transaction value hitting KSh 1 billion during the same period. How Internet banking is affecting M-Pesa agent business M-Pesa to bank transaction value grew to KSh 5.7 trillion, accounting for 16.1% of the total value of transactions. These trends are a clear indication of the decline in M-Pesa agent business across the country. In an exclusive interview with TUKO.co.ke, technology expert Moses Kemibaro referred to the trends as a revolution in Kenya's financial inclusivity. " "The shift away from physical transactions at M-Pesa agent shops to digital platforms signifies not just a change in consumer preferences but a revolution in financial inclusivity and accessibility. "Mobile money services like M-Pesa have been instrumental in bridging the gap for the unbanked and underbanked populations in Kenya. However, as the digital landscape evolves, so too does the way people interact with these services," said Kemibaro. Kemibaro explained that the rise in digital transactions can be attributed to several factors, primarily advancements in technology and a change in consumer behaviour. He cited the availability of smartphones and the internet, giving users convenience in financial transactions. "Moreover, the advent of paybill and till numbers has simplified the process of paying for utilities, school fees, and other regular expenses, further reducing the reliance on cash. "The convenience of transferring money directly from a mobile wallet to pay bills or for services offers a seamless financial experience, which cash transactions at agent shops cannot match," What can M-Pesa agents do to revamp their business? The tech expert noted that the transition has significant economic and social implications. He said M-Pesa agents have a notable impact on their business model, which needs to be re-engineered. "The decrease in foot traffic for deposits and withdrawals challenges agents to adapt and find new ways to remain relevant and profitable. It also poses questions about the future role of these agents in a digital-first financial ecosystem," he said. Kemibaro reiterated that the shift is here to stay since it promotes financial inclusion and encourages the growth of a digital economy, fostering innovation and efficiency across various sectors. What's beyond M-Pesa agent business? According to him, the transition demonstrates the need for continuous innovation by mobile money service providers, banks, and other financial institutions to meet the changing needs and expectations of consumers. He recommended collaboration among stakeholders in creating an inclusive, secure, and robust digital financial ecosystem.  "The shift towards digital transactions and the reduced reliance on M-Pesa's agent network represents a natural progression in Kenya's digital financial services sector. "It highlights the dynamism of technology and its capacity to reshape industries with a focus on leveraging technology to enhance financial inclusivity, foster economic growth, and build a resilient digital economy for all Kenyans," noted Kemibaro.

by  Wycliffe Musalia