Kenya Needs More Diversity in Payment Solutions – What Does the Future Hold?

July 9, 2020

The internet has brought about a number of new payment solutions, and this has increased over the last ten years with the booming mobile market. Mobile money services are considered to be a success in Kenya, with some sources citing that it would be impossible to run a business without mobile money in the current market.

However, as it stands, M-PESA is dominating the market and represents the one main platform for digital transactions in the country. Kenya needs to encourage more diversity in this regard, as this will help to boost businesses on a global scale.

M-PESA Has 99 Percent Market Share

Vodafone-owned M-PESA was launched by Safaricom in 2007 and, in the thirteen years since its inception, it has grown and expanded massively. It is now available in numerous other countries including Ghana, Egypt, Afghanistan, India, and South Africa, but is not a global superpower yet.

It has a stranglehold on the Kenyan mobile payments market, with a 98.8 percent market share. This means that those who don’t use it may not be able to perform transactions easily online. The two other online payment options for Kenyans are Airtel Money with a 1.1 percent market share, and T-Kash, which has 0.05 percent.

This lack of diversity makes it difficult for businesses in the country to appeal to global clientele. For example, this will put consumers from western countries off, as they are unfamiliar with the payment system.

Consumers want to see options that they are used to and that they can trust, and are unlikely to start using this different payment system purely to complete a transaction with a Kenyan business. It also means that Kenyan consumers are unlikely to shop internationally at sites that don’t offer M-PESA as a payment option.

What Other Payment Solutions Could be Introduced? argues that diverse payments are essential for businesses that aspire to go global. For this reason, if Kenyan companies want to have success on the world stage and, in turn, boost the economy in the country, they need to start opening up to different methods of transaction.

The mobile payments market is projected to reach staggering heights in the next five years, with Mordor Intelligence expecting it to reach a value of USD$12,407.5 billion by 2025. This is another reason why diversity is key. So, which payment solutions could Kenya look at to add more choice to the market?

PayPal is one payment solution that has been soaring over the last few years, ever since it split from eBay in 2015. In 2019, the company, which was originally founded as Confinity in 1998, was ranked 204th in the Fortune 500 of the largest corporations in the USA by revenue. The system has gradually spread across the world and is now available in Kenya. However, users can only withdraw money from it using Equity Bank. For it to become a viable payment solution here, it will undoubtedly need more support.

Neteller is another e-money transfer service that has been around for a long time, but has recently seen a massive upturn in usage. The company was founded in 1999, and has had major success as a payment solution for the booming iGaming industry. Indeed, 95 percent of the firm’s revenue early on came from online gambling.

Some of the longest-running online casino operators in the business offer Neteller as an option for transactions. The site accepts Neteller alongside other modern systems including ecoPayz and Skrill, so players can place deposits on the likes of slots, table games, and even live casino titles safely and securely.

Some of the other up-and-coming mobile payment solutions are those designed by the world’s leading smartphone providers. Apple Pay is a simple and effective way to make online purchases, and Samsung Pay is offering solid competition to its rival. Samsung is by far the more popular option for Kenyans, so its payment system has a better chance of success here than Apple’s.

China Could be a Good Model to Follow

Countries that are accepting of the idea that the world is rapidly heading towards a cashless society are well-placed to take advantage of this new era. As it stands, with the lack of diversity in Kenya, the country is way behind others in terms of being ready for this.

One country which is head and shoulders ahead of the rest of the world is China, where mobile-payment applications are already more commonly used than credit cards for eCommerce.

The main options in the Asian country are Alipay and WeChat Pay, and these haven’t only been successful online. They are now commonly used for physical transactions, where users simply have to scan a QR code in order to make a payment.

China has reached a stage where it is now the world leader in mobile payments, and this has been thanks to the cutthroat competition among systems in the mobile payment market. There are countless options available in the country, and 47 percent of mobile users use mobile or digital wallets.

When looking at countries like China, it feels like Kenya is years behind in terms of diversity in the mobile payment market. This is not good for the progression of the economy and the preparation for a potentially cashless society in the years to come. Kenyan businesses, especially those which operate online, need to welcome alternative payment platforms in order to grow.

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