M-Pesa across Borders

Today brought an announcement that Safaricom’s M-Pesa customers in Kenya would now be able to send and receive payments with mobile money customers of Vodacom in Tanzania – enabling true cross border payments to take place between mobile companies in the two countries.

A sample transaction today shows how it works:

Assumptions

  • The (mean) Central bank rate today was 1 Kshs = TZS 20.17
  • M-pesa transfer cost in Kenya for Kshs 100 to 500 is Kshs 11 to a registered customer versus Kshs 44 to an unregistered customer.
  • Initial theory that the charged would be for unregistered were proved to be wrong in an experiment

Sending Mpesa from Kenya to Tanzania

  • Sent Kshs 300
  • Charge Kshs 11 (about 4%)
  • Exchange rate 20.17Kenya Tanzania Mpesa
  • Recipient got Tzs 5,757

Sending Mpesa from Tanzania to Kenya

  • Sent Tzs 5,000
  • Charge (assume 4%) Tzs 200
  • Exchange rate 20.17
  • Recipient gets Kshs 236

The transactions takes a few minutes to effect, but they actually work and it seems, for now, that there’s very little margin being made on the exchange rate, while the remittance / transaction charges are in line with in-country transactions.

This comes a few weeks after Tanzania enabled cross network mobile payments, which were endorsed by their main mobile money companies – Tigo (Milicom), Airtel, Zantel and Vodacom.