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Kenya, home of vast savannahs and incredible wildlife from giraffes to elephants, is also the home of M-Pesa, the world’s leading mobile money service. M-Pesa combines “M,” for mobile, and “Pesa,” the Swahili word for money. Now 12 years old, M-Pesa was years ahead of similar services such as Apple Pay and Venmo in the U.S., and WeChat and AliPay in China.

M-Pesa enjoys wide adoption in Kenya. Some 93% of Kenya’s population has access to M-Pesa, and the service accounts for nearly half of the country’s $75 billion GDP. More than 80% of gig workers in Kenya say they would rather be paid via M-Pesa than any other payment method.


Transpay’s regional manager for East Africa, Daniel Muchika, recently shared his knowledge of the local market and Transpay’s service offering there.

Q. What trends do you see in Kenya in terms of the way recipients prefer to receive funds from U.S. companies?

Between 70% and 80% of the funds that Transpay and its parent company for consumers, Transfast, send to Kenya goes into mobile wallets. Recipients expect instant credit, 24/7, even during bank holidays and weekends. Of the remaining 20% to 30%, most of those recipients choose to receive their money instantly into their bank accounts. Less than 5% of the recipients pick up their funds in cash.

It is likely that if recipients are given a choice, they would prefer direct to mobile first, then direct to bank account and finally, cash pickup to receive funds. This is the reason even banks are beginning to freeze expansion of locations and some are even cutting down on locations in favor of digital channels.


Q. Why is there such a strong preference for having funds sent directly to an M-Pesa wallet or the recipient’s bank account?

As per World Bank’s Global Findex Database 2017 report on financial inclusion and the Fintech revolution, 82% of Kenyans have bank accounts, the highest percentage in Sub-Saharan Africa --  ahead of South Africa and above the world’s average of 69%.

However, while most of the population is banked, the preference is to receive money in mobile wallets because it offers immediate opportunity for consumption, such as bill payments into multiple bank accounts and other e-wallets, person-to-person transfer and withdrawal. In fact, most of the cases where we see a preference for receiving funds into a bank account, it’s because the funds being received exceed the maximum allowed per transaction for a mobile wallet. M-Pesa transactions are currently capped at Kes 70,000 (about $700) with a wallet hold limit of Kes 100,000 (about $1,000).

Another factor driving preference for M-Pesa wallets is the reward system for frequent use. Frequent use of M-Pesa services entitles account holders to access unsecured loans of up to $500 within M-Pesa or up to $2,500 from financial services institutions connected with M-Pesa, depending on an individual’s eligibility.

Overall, we see that a recipient’s preference is mainly guided by convenience, limits of amount to be received and the benefits accruing from use of bank account and/or mobile wallet.


Q. Is cash pickup a feature that recipients seek out?

Cash pickup remains king for remittances into Kenya from the U.S., Middle East and Europe that form the bulk of Kenya’s inward flows. It’s possible that the population of Kenya’s diaspora remitting cash back home are not familiar with M-Pesa services, as some remitters are not necessarily Kenyans themselves. And, recipients in Kenya may be foreigners without M-Pesa wallets or local bank accounts.  


Q. Would you characterize the local currency as stable or volatile?

Kenya Shilling is relatively stable and one of the most stable currencies in the Sub-Saharan Africa free economies. Kenyans are very comfortable being paid in the local currency.


Q. What are the regulatory hurdles involved in sending funds to Kenya?

It is important that U.S. businesses paying recipients in Kenya observe the Crime and Anti-Money Laundering Act that, among other things, requires obtaining minimum information on senders and recipients in order to uniquely identify them. For amounts exceeding $10,000, the law requires the terminating institutions -- for example, the banks in Kenya -- to require proof of source of funds and a declaration on intended use of funds which can be furnished in the form of supporting documents such as scanned sale agreements and certified foreign bank statements.


Q. Who are Transpay’s key payout and banking partners in Kenya? How extensive is the network?

Transpay sends funds into M-Pesa accounts instantly, 24/7, and can send funds to all bank accounts in Kenya. For 80% of Kenyan bank accounts, Transpay offers instant bank account deposits.  M-Pesa can be cashed out within every 200-meter square radius in any town in Kenya and is accepted as payment for more than 90 percent of bills in Kenya. Transpay also enjoys a solid cash pickup network from Nairobi to every remote town in Kenya through Equity Bank, Co-operative Bank of Kenya and SBM Bank Kenya.


Q. Are there plans to expand the network in 2019?

Transpay has an enviable network in Kenya, with multiple options that rival those of the competition. Plans are to deepen product offering to include bill payments.


Q. What are Transpay’s service levels in Kenya?

We offer instant credit into M-Pesa wallets and 80% of bank accounts in Kenya with the rest of the bank accounts being credited next day.

Cash pickup services are available within minutes at any branch of Equity Bank Kenya, Co-operative Bank of Kenya, Upesi Money Transfer Limited and SBM Bank. These services are available during regular banking hours of 9 a.m. to 3 p.m. on weekdays and 9 a.m. to noon on Saturday (closed on Sundays). No charges are incurred by the recipient for cash pickup.


Thank you, Daniel! To learn about how Transpay solved for M-Pesa for the United Nations Federal Credit Union, check out our case study.

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