Safaricom goes shopping with M-Pesa

Competition between mobile telephone service providers intensified on Friday, after Safaricom entered into an agreement with two supermarket stores, which will see its customers buy goods using the money transfer system, M-Pesa.

Experts in the sector said the new initiative by the leading mobile phone operator is meant to hold on its subscribers, following an assault by Zain in recent months. Zain drastically reduced calling and texting rates, stirring the market dominated by Safaricom.

The next stage of competition will be in providing relevant services because there are levels beyond which rates cannot be lowered if the companies are to remain afloat, the experts say.

“The companies are limited by the interconnectivity charges provided by the Communications Commission of Kenya, and unless these rates are adjusted again, it would seem they have reached the benchmark,” said Mr Ian Kamau, an ICT expert.

Safaricom signed agreements with Uchumi and Naivas supermarkets, enabling the 12.5 million Mpesa account holders to buy goods from the super stores using the system.

“This has been my dream, and it gives me great pleasure to see it come to fruition under my tenure,” said outgoing Safaricom chief executive officer, Michael Joseph.

He added that customers will not have to withdraw cash to buy goods, giving them convenience and reducing the risks associated with carrying cash.

Customers will initially enjoy the service free but it will attract transaction charges at the end of the offer, which will be communicated by the company.

Customers will be able to buy goods worth between Sh100 and Sh35,000. “Our eventual aim is a situation where M-Pesa subscribers leave home with money in their accounts but need no other form of cash to transact during the day,” said Mr Joseph, who will continue to play an advisory role in the company.

He said the company intended to sign up petrol stations, restaurants, hotels and chemists as M-Pesa ‘buy goods partners’.