The Government on Tuesday ordered an audit of Safaricom’s M-Pesa money transfer system just a day after the mobile phone service firm signed a deal with Western Union for international cash transactions.
The instructions to the Central Bank came from Finance minister John Michuki as he launched new regulations at the School of Monetary Studies in Nairobi for micro-finance institutions.
“I don’t know whether M-Pesa will end up well. I want guidance from Central Bank over the concerns of M-Pesa money transfer system.
“They should study the scheme and pronounce policy to safeguard depositors,” Mr Michuki said.
However, speaking to Nation by telephone from London, Safaricom chief executive officer Michael Joseph said he welcomed the move saying it would reinforce the confidence in the service.
“We welcome the audit by the Central Bank of Kenya since it will verify the concerns and satisfy the regulator that we have put safeguards and the risks are minimal,” Mr Joseph said.
He said the money is deposited in a trust account and no employee of the company has access to it.
M-Pesa money transfer system, launched in March 2007, has become popular with the unbanked population serving as deposit account for some, causing jitters in the banking industry.
There are over four million M-Pesa registered accounts and over Sh20 billion has been transferred through the system since it was launched.
“Some of the banks are saying we are in competition, but I don’t think M-Pesa is a threat to banking industry.
“What we are doing is that we filling a gap that the banks have left out,” Mr Joseph had told the Daily Nation’s Smart Company in an earlier interview.
Central Bank of Kenya governor Njuguna Ndung’u has also in the past rooted for the M-Pesa mobile money transfer service.
He has described it as a “step towards making financial service accessible to all Kenyans who have access to a mobile phone.”
On Tuesday, Prof Ndung’u said the Government will establish a national payment and settlement system that would provide mobile money transfer systems with a platform on which to operate.
“The M-Pesa money transfer system is very good, but it can be used by bad people,” he said.
The Kenya Bankers Association has in the past called for regulations for the mobile money transfer over the possibility of the system being used for money laundering.
An international money transfer launched by Britain-based Vodafone, a shareholder in Safaricom on Monday, is expected to build on the success of M-Pesa.
Vodafone said the service would allow customers to send remittances from Western Union stores directly to Safaricom mobile subscribers in Kenya within minutes.
“The successful take-up of M-Pesa in Kenya has clearly demonstrated the demand for easily accessible, secure cash payment services in emerging markets,” said Mr Nick Hughes, Vodafone’s head of international mobile payments.