The Central Bank of Kenya is set to launch a national payment gateway that will compel Safaricom to accept payment from rival firms such as Airtel on its Lipa na M-Pesa feature to enable seamless transactions.
The move aims to curtail Safaricom’s dominance in the mobile money service and Lipa na M-Pesa which reportedly handled payments worth Sh970.2 in the financial year to January 2022. Currently, mobile money users from Airtel, Telkom and other networks cannot make payments through M-Pesa till and paybill numbers.
According to the CBK, lack of interconnection among telecommunications operators has hampered the rising use of mobile money at agents and merchants via platforms such as Lipa na M-Pesa.
“This trend is expected to continue increasing once initiatives such as interoperability are fully rolled out, allowing customers to seamlessly transact across the ecosystem irrespective of their provider,” the CBK said.
The apex bank is attempting to replicate the existing Airtel Money and M-Pesa link through interoperability. Currently, users can send money across the mobile phone networks, which means they can send money from M-Pesa and have it appear in their Airtel Money wallet and vice versa.
“The emergence of a fully integrated ecosystem that is seamlessly interoperable is critical. A strong foundation has already been laid with the rollout of P2P [peer-to-peer] interoperability in 2018 and the industry engagement that culminated in the proposal for a single integrated solution with multiple functionalities (national switch),” the CBK said.
Safaricom’s till and pay-bill service has risen to take 85.8% of the non-cash payment market for regular goods and services, demonstrating the mobile money platform’s entrenchment in everyday transactions.
“There is limited competition for merchant acceptance in mobile money space. This is also due to limited acceptance of competitor payment instruments,” the CBK said.
“Limited interoperability in the mobile money merchant acceptance space limits payment options available to customers as well.”
Lipa na M-Pesa facilitates payments, cash transfers, credit, insurance, savings, and investment.