Upgrade to shut M-Pesa for weekend

Millions of Kenyans now used to the convenience of sending money to relatives and friends and paying bills through the M-Pesa mobile phone cash transfer system will not access the service this weekend.

Market leader Safaricom will be upgrading the service between Saturday night and Monday, so customers will be unable to send money over the weekend.

On Wednesday, officials from the company said they were taking the innovation, which has dramatically changed transfer of money in Kenya to “a new platform” that will provide faster and more reliable service.

Safaricom CEO Bob Collymore said this was meant to make the service more efficient and give it the capacity to handle more products.

“This will enhance efficiency and enable the company to provide more innovative and ‘cutting edge’ M-Pesa products,” he said.

The shutdown, coming just a few days after Orange launched a rival cash transfer service, is likely to trigger a rush on Thursday and Friday as M-Pesa subscribers try to send or withdraw money before Saturday.

Launched in 2007 by Safaricom, M-Pesa has enjoyed a growing clientele over the years.

By the end of September this year, M-Pesa had recorded over 12.7 million subscribers and at least 20,500 agents countrywide.

The hitherto unexploited market, which has given competition to banks and other money transfer services, has been replicated by all the other mobile phone service providers.

Essar Telekom Kenya Ltd introduced yuCash late last year, Zain Kenya unveiled a re-branded Zap in early 2009, while Telkom Kenya rolled out Orange Money earlier this week.

These networks introduced their services at a cheaper cost in a bid to beat the market leader, M-Pesa.

The money transfer service has also handled more than Sh230 billion in person-to-person transfers since its launch.

By the end of last year, M-Pesa had a subscription base that covered about 25 per cent of the Kenya’s population.

The 20,000-plus number agents, which has increased significantly in the past two years, far outstrips Kenya’s 1,500 ATMs and 840 bank branches.

The monthly person-to-person transactions are estimated to be more than Sh23,000, with an average of Sh2,000 per user a month.

According to a survey carried out by the Financial Sector Deepening Trust in 2008, 40 per cent of households use M-Pesa.

The company has come up other services other than from withdrawing or sending of money, which would help subscribers access other services as well.

These include payment for bus tickets, flights, mobile banking, buying and selling of goods and services and international money transfer.

In 2009, Safaricom made Sh1.5 billion from M-Pesa, which represented 2.1 per cent of the total revenue for that financial year.

M-Pesa charges a transaction fee to the sender or receiver of money.