New plan to pay hotel bills through the phone

Safaricom, in partnership with KopoKopo and Eat Out Kenya, last week launched a new service on its M-Pesa platform that allows customers to pay hotel bills using their phones as efforts to build a cashless economy continue.

The new service allows M-Pesa users to visit a restaurant or any other registered merchant and pay for services directly from their phone without incurring transaction fees.

“The service will allow shoppers and hotel clients on the M-Pesa platform to enjoy their meals without necessarily having cash in their pockets. This is convenient for the customer and shuts out chances of fraud,” Safaricom chief executive Bob Collymore said.

Coming in the same week that Mauritian firm AFB launched a new credit card service in Kenya, the developments point to a simmering battle for the fast-growing electronic payments market.

AFB, with operations in three other African cities — Lusaka, Accra, and Cape Town — launched its first-ever credit card in Nairobi last week, joining an ongoing fight for market share in the plastic money business.

“We have chosen Kenya as our launch market because the people here are fast at adopting new technologies. Nairobi’s reputation as an African commerce, trade, and development hub has also made it a strategically sound location for the company. We believe it is a natural recognition of Kenya’s role as the financial heart of the East African region,” AFB chief executive officer Karl Westvig said at the launching ceremony.

The credit card became live in October and has been operating on a pilot basis over the past six months. It is available to all Kenyans above the age of 18 and with a regular income.

“We have been eyeing this market for a long time after our research indicated that Kenya is one of the countries in Africa with developed financial and retail infrastructure. We want to use this opportunity as a gateway to the wider East African region that has a lot of promise in terms of returns on investment,” Mr Westvig said.

The card, currently with an upper limit of Sh25,000, allows customers to spread the cost of their purchases into affordable instalments over a period of six months. The limit is open to adjustment after a customer displays a certain level of honesty. AFB will work with the Credit Reference Bureau to keep tabs on defaulters.

According to the latest statistics from the Central Bank of Kenya, in January the value of money transacted using plastic money grew 136 per cent to Sh129.86 billion, only Sh11.26 billion lower than the Sh141.12 billion transacted over mobile money.

In January 2013, 31.4 million transactions were carried out using payment cards, in comparison with the 11.67 million transactions carried out in January 2012.

Most, 97.68 per cent, of all these transactions were concluded using debit cards, a pointer to the fact that Kenyans are still credit-averse.

Last month, Visa announced that it would target small-scale retailers and schools with its card payment technology.

In January, MasterCard inked a deal with Equity Bank to issue at least five million cards to Kenyans and point-of-sale (POS) devices to retailers before the end of the year. (Read: Visa, MasterCard in all out war for giant share of cash in retail stores)

MasterCard has also indicated that it plans to use youth associations as a marketing channel for its products.