This week, mVisa was launched in Nairobi. It had earlier debuted as a pilot with Family Bank nine months ago butis now live at eight other banks including Barclays, Cooperative, Ecobank, KCB, National Bank, NIC, Prime and Standard Chartered.
The roll out comes with free person-to-person (P2P) money transfers for mVisa customers at these banks to others registered mVisa members at any of the banks. For example, customers of Cooperative Bank can get mVisa by updating their MCo-op cash phone apps or those without MCo-op cash can get it by dialing USSD *667# on their phones and this will bring up mVisa which they can send to any other mVisa users and pay for goods and services at no extra cost.
mVisa depiction from Visa site.
For merchants, payment is by a QR code within a phone or via a card displayed at a shop or other places of business. QR codes enable transfers without the need for a smart phone and for merchants, they can accept payments without having to invest in expensive point of sale devices such as card readers.
There was a neat video shown about how a boda boda (motorcycle taxi) operator could have a QR code on the back of their safety jacket – and which a passenger could scan to complete a payment. mVisa aims to drive financial inclusion and a comment was made that one cost to using cash (which is not transparent) is that small businesses (SME’s) may have good sales and receipts, but can’t get credit from banks; therefore easing the processing of verifiable payments to a business will enhance its viability.
mVisa is now live in Kenya , India, Rwanda and Egypt with plans to launch in Nigeria, Uganda, Tanzania, Ghana, Indonesia, Kazakhstan, Pakistan and Vietnam underway.
Recent events in the fintech (financial technology) payment space in East Africa.
The Kenya Bankers Association (KBA) unveiled Pesalink, a digital payments platform that is expected to cut the cost of transactions and transform the way consumers interact with their banks. Pesalink is a fully owned subsidiary of KBA and it will enable customers to make payments between banks in real-time, around the clock, without having to go through intermediaries. It has been approved at Standard Chartered, Co-Operative, Barclays, Commercial Bank of Africa, I&M, Diamond Trust, Gulf African, Guardian, Victoria, Credit, Prime and Middle East banks…“RT @alykhansatchu: .@HabilOlaka says @KenyaBankers will be targeting payments that exceed M-Pesa’s maximum transaction of ($675)”
Cooperative Bank: Is a demonstration that the how banks ar moving in the technology space. Kenya’s 3rd bank has adapted to their customers embrace and they enable more customers to use alternative channels for transactions. They had a valentines’ week promotion to highlight and encourage customers to use alternative channels such as MCo-op Cash (get a loan straight from ones’ phone at 1.16% per month and send money to other MCo-op users for free) or at a Co-op Kwa Jirani agent (deposit cash into someone’s Co-op Account for FREE at a Co-op Kwa Jirani agent) or Co-Op cards.
KCB will unveil it’s fintech future – a strategy based on a digital finance in Q2 of 2017
Another is EcoBank which launched a new mobile app which integrates Masterpass QR, a mobile payment solution from MasterCard. It enables customers to send and receive money instantly across 32 other African countries.
National Bank has launched cashlite payment solutions suite for county governments, Ministries, Government Agencies, and Departments. The bank has provided a variety of options for payments including mobile money, smart cards, and e-wallet and cash options, aligned with the continuing growth of mobile technology as well as consumers’ expectations for convenient mobile and online payments.
Strathmore University has supplied Busia county government with a revenue collection systems called CountyPro® with which the government hopes to grow revenue by 300%. It caters for all the unstructured county revenue sources including parking, market cess and trailer parking.
Mastercard is the technology partner for the Huduma Card in Kenya enabling payments for government services. It is being issued by Commercial Bank of Africa, Diamond Trust, Equity, and Kenya Commercial banks. Kenyans will be able to pay for an array of enrolled Government services such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) amongst others.
mVisa will soon be in 10 countries as Visa expands its QR payment service for safe and easy mobile payments in emerging markets. It is already live in India, Kenya (started with Family Bank) and Rwanda, and will soon be available to merchants and consumers in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan, and Vietnam.. (mVisa) allows consumers to use their mobile phones to make cashless purchases at merchant outlets, pay bills remotely and even send money to friends and family members by securely linking their Visa debit, credit or prepaid account to the mVisa application. Also any bank’s mVisa customer – regardless of where they bank – can transact on any mVisa merchant and merchants do not need to invest in POS infrastructure. Visa has partnered with Co-Operative, Family, KCB, and NIC banks.
Mastercard commitED to financially include 100,000 Kenyan micro merchants with Masterpass QR, a simple and secure digital payment solution. It will be introduced through various financial institutions. With it, consumers will be able to pay for in-store purchases by scanning the QR (Quick Response) code displayed at the checkout on their smartphones, or by entering a merchant identifier into their feature phones. Masterpass QR is currently being rolled out in Nigeria, Ghana, Rwanda, Uganda, and Tanzania.
Safaricom has issued 16,000 Lipa na M-Pesa cards in the pilot phase of a project that will launch later in the year. The Lipa na M-Pesa card uses pin and chip technology…It is also equipped with Near Field Communication (NFC) (which will) increases the speed at which customers make payments.
Verve: A dozen Kenya banks have partnered with Verve International, Africa’s leading low-cost payment network provider, in their push towards interconnectivity, cardless transact ability, and digital payments. Verve, best known as a card issuer has more than 32 million Verve cards and virtual/digital tokens issued across Africa and Verve is used in 19 African countries.
Pesapal adds American Express Pesapal integrated American Express into its payment platform on February 27, and AmEx card holders can now use their cards to transact on any online payment portal that uses Pesapal. This is especially useful for hotels and other companies in the East African tourism space. Pesapal which is in Kenya, Uganda, Tanzania, Zambia and Malawi and plans to expand to Nigeria in 2018 also offers an online booking engine for Hotels called ReservePort that’s used by Serena and Heritage brands.
Facebook: Facebook added international money transfers to its chat app. The service comes via London-based startup TransferWise in the form of a Facebook Messenger chatbot and enables transfers to and from the US, Britain, Canada, Australia, and Europe.
Bitpesa: The company introduced an Africa to China corridor enabling users to send payments from Africa, directly to a Chinese bank account using bitcoin.
European choice: How much does it cost to send money from Germany to Kenya?@WehliyeMohamed posted that the global average cost for sending $200 in Q3 2016 was 7.42%, and that It cost him 6.7% to send money to Kenya. Then @MkenyaU answered that it costs 1.5% when he sends €200 from Germany and this reduces to 0.6% when he sends €500. He cautioned that some companies charge zero fees but their exchange rates are horrible as he shared a comparison of a dozen services available to send money from Germany to Kenya.
Safaricom Mpesa: 10-year-old M-Pesa had 6 billion transactions in 2016 and is now in 10 countries – Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania. A new feature in M-Pesa will enable users to see the cost of transactions. In the initial phase, customers will be notified of the costs after, and in the second phase customers will receive a pop up message informing them of any charges prior to the transactions, while the third phase will see the service being made available to value-added M-PESA financial products including M-Shwari, KCB M-PESA, Okoa Stima and M-Tiba. The second and third phases of the update will be rolled out in coming months.
There have been some calls and reports recommending that M-Pesa be split from Safaricom. This could have happened years ago, but it is more difficult now that M-Pesa is an entrenched and central part of Safaricom today.
Tala raised over $30 million in Series B financing, led by IVP and joined by Ribbit Capital. Tala uses smartphone data to build financial identity .. mobile app for Android aggregates more than 10,000 different data points on a customer’s device, including financial transactions, savings, network diversity, and geographic patterns, and builds a customized credit score, or financial identity. Tala operates in East Africa and Southeast Asia with its main top markets being Kenya and the Philippines. Tala has delivered more than one million loans totaling over $50 million, and more than one million individuals have accessed the product in East Africa alone. See how Tala compares to other (fintech) / phone-lending apps in Kenya. Forbes termed this the largest Series B raised by a woman founder in recent memory.
Zeep is a smart and simple mobile platform that helps young people (teens) nurture good financial habits. They ‘learn by doing’ within the framework of a secure financial environment with guidance from their parents.
Companies to watch
Irish Tech News released a list of 38 Kenya fintech companies to watch in 2017; these include Abacus, BitPesa, Branch, Cellulant, Chura, FarmDrive, Kopo Kopo, M-Changa, Pesapal, Tala and Umati.
The FTAfrica Payments Innovation Summit will take place on 29 March 2017..it will bring together 250 business leaders from various mobile and financial interest groups and explore challenges and opportunities inherent in these developments: from providing greater financial access to un-banked people across the continent to providing new services and opportunities for an emerging middle class.
TransferWise had just launched international money transfers via Facebook messenger chat.
Methods Kenyans use to remit money from Europe
TransferWise’s chatbot enables customers to send money to friends and family to and from the United States, Britain, Canada, Australia and Europe from Facebook Messenger.
Facebook already allows its users to send money domestically in the United States via its Messenger app, but has not yet launched similar services internationally. TransferWise said its service will be the first to enable international money transfers entirely within Messenger.
One of Europe’s most well-known fintech companies, TransferWise was launched in 2011 by Estonian friends Taavet Hinrikus and Kristo Käärmann out of frustration with the high fees they were being charged by banks for international money transfers.
We did a survey a few weeks ago to see how a handful of Kenyans in Europe send money to Kenya, and asked them to give reasons why they use a particular method. W hat’s interesting is how rare banks are in the person to person transfer space. We want to expand this further and see how Kenyans in other (European and non-European) countries remit funds. This was almost Kshs 368 billion (~$3.7 billion of receivables from the rest of the world) in 2015 according to the Kenya Economic Survey 2016.
This morning at a session on currencies and value I got re-introduced to community currencies. Two years ago there was a mini storm about the legality of a currency called Bangla-pesa that has since quieten down.
There are five Kenyan community currencies that circulate mainly in slum areas of Nairobi and Mombasa.
Community currencies in Kenya
Community currencies in Kenya
The papers notes are by the Grassroots Economic Foundation. They are not backed by local currency but have the same value as Kenya shilling notes. Member of groups which have constitutions and rules before they join, each gets currency worth 400. They actually only get 200, and 200 from each member goes to a community fund – to carry out community projects such as trash cleaning and hosting sports events.
The lesson today showed how hawala, bitcoin, mpesa had different applications in communities, with a focus on uses away from the formal sector. Also that 10 years after formal financial inclusion, there is still a lot of money being handled through informal sectors.
This is one of the many findings from a ground-breaking study of cross-border trading at Busia. And while banks worry about being out-innovated by telco’s, and telco’s worry about being out-innovated by apps, the truth is that it is the consumer who drives the innovation.
M-pesa was an accidental by-product of an airtime transfer product, and long before M-pesa, bank customers were doing free instant money transfers using the bank’s IT platform, thus bypassing money transfer giants that charged 10%. It is very likely that customers continue finding new ways to use banks and mobile money (such as M-pesa) in ways that the institutions are not even aware of now.
The report – Borderland Biashara: Mapping the cross border, national and regional trade in the East African informal economy (download here) also found that :
Going to a bank was a time-consuming chore. Few benefits were perceived, and an account was considered to provide little or no ROI except when required as a prerequisite such as by local Coca Cola wholesaler for registering a new distributor
Many considered the bank account a trap for cash which could be better put to use as working capital, generating returns on investment in inventory.
Bank charges made no sense.
Teresia has six years under the shade of the same tree, and since devolution has been paying daily rent in the form of market fees to the local county council. Yet this, along with her internal migrant background hampers her efforts to obtain a loan at the local bank. She’s neither local nor has a permanent address, in their eyes, she’s high risk.
Traders, brokers, currency exchange agents, and transporters, all had anecdotes on the variety of arrangements available for cross border transactions, with and without the use of a bank account. These arrangements were within the limits of the law, for the most part, and were made to account for the barriers thrown up by lack of interoperability between telco service providers and their networks.