Banks claw back on mobile money market, with 136pc gain in January

Commercial Banks effort to capture back the electronic payments market taken over by mobile money transfer services is bearing fruit, with statistics showing transactions concluded through plastic money getting at par with those on mobile money.

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 comparison, in January last year the Sh114.06 billion that went through mobile money was more than double the Sh54.94 billion transacted through payment cards and by extension through banks.

The gap between the value of plastic money transactions and mobile money transactions narrowed steadily in 2012 on the back of aggressive marketing by card issuers and network providers in the country.

“Banks have campaigned actively to draw in more card users. There has also been a strong push by both Visa and MasterCard to increase acceptability of card payments at merchant outlets,” said Mr Danson Muchemi, chief executive of electronic payment processor, JamboPay.

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.

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

Last month, Visa announced 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.

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

Further, Mr Muchemi says integration of mobile money and card payment technology by some Kenyan banks has been partly responsible for the dramatic increase in the values transacted through plastic money.

However, he adds, mobile money providers will need greater innovation to keep up.

“Although mobile money is more widely accepted, it is still primarily a money transfer tool. Innovation is needed to eliminate friction and delays when subscribers use mobile money to pay for goods and services,” he said.

Although the picture on the electronic payment front may seem rosy, data collected by research firm Consumer Insight Africa indicates that cash still accounts for 95 per cent of all payments in the country due to low acceptability of electronic forms of payment.