CAK orders Safaricom to open up M-Pesa

Sunday July 27 2014

PHOTO | FILE A customer makes a transaction at an M-Pesa kiosk in the past.

PHOTO | FILE A customer makes a transaction at an M-Pesa kiosk in the past. The effect of mobile money transfer on electronic card payment is slowly becoming clear with transactions conducted through debit and credit cards slumping by a third in the first half of 2014.  NATION

By LILIAN OCHIENG'
More by this Author

The Competition Authority of Kenya has ordered Safaricom to open up M-Pesa network to rivals. It has also prohibited the mobile operator from levying extra charges on competitors using its network. 

This brings to an end a long battle between Safaricom and Airtel over exclusivity of the service, which barred the 85,000 agents from engaging in business with other mobile operators. 

In a letter signed by the watchdog, and sent to Safaricom and Airtel on Friday July 25, CAK ordered the former to effect the directive before July 18. 

“All restrictive clauses in the agreements between Safaricom and mobile money transfer (M-Pesa agents) be immediately expunged but in any event not later than July 18, 2014,” the letter states.

CAK in its ruling also declared that Safaricom’s oversight shall be limited to its business with the agents. Each mobile money service provider shall also be responsible for ensuring compliance with the Central Bank of Kenya regulations. 

“We did not rule on the interoperability and the cost of transactions because it is an issue that needs the input of both the Central Bank of Kenya and the Communications authority,” CAK director-general Wang’ombe Kariuki said on phone. 

Removed exclusivity

The ruling, however, comes after Safaricom said it removed exclusivity from its network in February. The telco said it sent out new contracts to its agents countrywide by March, notifying them that they were free to do business with other operators. 

“In the new contracts, we deleted all references to exclusivity for mobile money products and services and replaced them with non- exclusivity provisions,” Safaricom director corporate affairs Nzioka Waita said. “We communicated to agents in February and contracts were amended in March.” 

Airtel had, however, insisted that Safaricom should go public and official on the decision to open up its network.

“Safaricom should make public and official the decision to open up its network,” Airtel chief executive Adil El Youssefi said earlier.

Mr Kariuki said the ruling takes effect immediately followed by the authority’s groundwork surveillance to ascertain that all that were agreed have been adhered to. 

“Consumers will henceforth spot brands of Airtel and other telcos engaging with Safaricom on the M-Pesa agent outlets,” Mr Kariuki said.