Sh1.1tr moved via phones as use of e-cards down

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.

An almost equal percentage in growth was recorded in payment through mobile phones. 

Latest statistics released by Central Bank of Kenya show transactions made through electronic payment cards in six months to June declined by 30 per cent to Sh628.6 billion compared to Sh818.6 billion recorded over a similar period in 2013.

In the mobile phone frontier, a total of Sh1.1 trillion was transacted representing a growth of 26 per cent from the Sh872 billion transacted in the same period in 2013.

Transactions via mobile phones surpassed those executed through payment cards in 2011, hardly five years after the onset of mobile banking.

While mobile money moved Sh1.17 trillion in 2011 less than half -- Sh578 billion -- was transacted through payment cards in 2011.

In April, the Enhancing Growth of Plastic Cards in Kenya report released in April this year, TNS Kenya – a research firm – highlighted many reasons that have slowed down the uptake of payment cards usage in the country.

Some of these include fear of card fraud or system failures, unreliable network and constant down time challenges that affect bank operation and subsequent reputation, particularly for acquirers, association of plastic cards with the elite and foreigners and the understanding that swiping is expensive.

But according to Safaricom’s CEO Bob Collymore, electronic payment cards and mobile banking services will continue operating side by side regardless of the strong growth and huge potential the latter embodies.

“I think there’s a place for both. I foresee them existing side by side,” Mr Collymore told the Sunday Nation.

Since the launch of mobile money in 2007, Sh7.1 trillion has been transacted through mobile phones as more people and firms embrace it.

Last year, the amount stood at Sh1.9 trillion, bigger than the Sh1.8 trillion national budget for the 2014/15 financial year. Analysts have attributed increased uptake of mobile phone financial services to its convenience, ease of use and security.

The mobile phone transactions range from bill payments, money transfer, and payment of insurance premiums, borrowing of money, account transfers, school fees payments and making savings.

On the other hand, transactions made through electronic payment cards stood at Sh1.5 trillion in 2013.

ELETRONIC PAYMENT CARD

According to Kenya Bankers Association (KBA) chief executive officer Habil Olaka, electronic payment cards offer a universally accepted mode of payment, particularly with regional and international reach, which may not be possible with the current mobile payment systems.

So, he says their continued existence in the face of mobile phone transactions is guaranteed.

“To the extent that a person can make universal transactions using a mobile phone as opposed to a payment card, there would be a competition dimension arising from this new development. Until then, the market segmentation process will continue to evolve, with customers choosing the most convenient for their purposes,” Mr Olaka said.

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