Safaricom loses titanic war on control of cash transfer service

What you need to know:

  • “Regulators decided to allow only Taisys to roll out in Kenya under a pilot basis. This will help give us in-depth analysis into the technology without exposing the market to many risks,” CA director general Francis Wangusi said.
  • In a statement released later on Monday Safaricom welcomed the decision, saying they were happy with the commitment to review security on the thin SIM card and publish guidelines to protect consumers and industry players.
  • However, to address the concern raised in totality, the roll out is to be done on a one-year pilot basis to give the two regulators a chance to carry out a detailed study on the technology.
    Encourage prudent behaviour

Safaricom has lost the battle for the control of mobile money transfer after regulators allowed Equity Bank to roll out similar services using thin SIM card technology.

The approval, officially announced yesterday, was granted by both Communication Authority of Kenya and Central Bank of Kenya. The two dismissed Safaricom’s objections on the new card - which will ride on existing SIM cards - saying that initial investigations showed “that no major complaints and particularly on interception of traffic of the primary SIM card have been reported so far.”

However, to address the concern raised in totality, the roll out is to be done on a one-year pilot basis to give the two regulators a chance to carry out a detailed study on the technology.
Encourage prudent behaviour

CA board chairman Ngene Gituku and CBK Governor Njuguna Ndung’u told the Press yesterday that the first phase would run for a year.

“We had a board meeting Friday and agreed that Equity Bank will roll out on a pilot basis. If vulnerabilities are found within the period, its services will be cut,” Mr Gituku said.
Equity Bank will roll out the service under Finserve Kenya, one of its subsidiaries.

Prof Ndung’u said Central Bank wanted to understand the system before giving the full go-ahead. “We do this to encourage prudent behaviour within the market and not to shut it from innovations,” he said.

SAFETY CONCERNS

In its objection to the roll out, Safaricom raised safety concern of the card, saying it could compromise the security of its 19 million money transfer service customers.

“Based on the opinion of GSMA, save for the inherent vulnerabilities of all SIM cards, there are no specific and confirmed vulnerabilities arising from the use of the thin SIM,” Mr Gituku said.
Over the pilot period only Taisys’ thin SIM card, proposed by Equity Bank, will be in operation.

“Regulators decided to allow only Taisys to roll out in Kenya under a pilot basis. This will help give us in-depth analysis into the technology without exposing the market to many risks,” CA director general Francis Wangusi said.

According to Mr Gituku, the CA board made the decision after elaborate consultations that ascertained the technology complied with all minimum mandatory international thin SIM card standards, noting that no major complaints on the technology on interception of traffic of the primary card had been reported.

In a statement released later on Monday Safaricom welcomed the decision, saying they were happy with the commitment to review security on the thin SIM card and publish guidelines to protect consumers and industry players.

“We are further encouraged by the CA’s commitment that in the event of any vulnerability during the testing period, it will take steps to suspend the use of the SIM overlay in the Kenyan market,” Safaricom’s director of corporate affairs Nzioka Waita said.

CA said China National Computer Quality Supervising Test Centre and Bank Card Test Centre of China showed that Taisys SIM complies with International Organisation for Standardisation (ISO) and European Telecommunications Standards Institute (ETSI) standards.

The new thin SIM card technology has been the subject of a vicious battle between Equity and market leader Safaricom.

The parliamentary Energy and Communications Committee, chaired by Mr Jamleck Kamau, early this month ordered CA to seek the board’s approval after announcing that Equity could roll out the technology.

“This project should not continue until the board has made its decision,” Mr Kamau said before the committee.