Telecoms service provider Safaricom Monday launched Lipa na M-Pesa- a new financial service that enables consumers to pay for goods and services using mobile money without incurring transaction charges.
With over 17.1 million customers and an average of seventy billion shillings monthly, Safaricom is seeking to entrench its services in the most basic money transaction service for small businesses including payment of salaries, utility payments, promotional payouts, dividend payments as well as payments within the transport industry.
Unlike M-Pesa, which charges a commission for every transaction, the new service shifts that responsibility to the registered service providers, levying them a 1.5 per cent commission on the value of every payment made through the system.
Shoppers can, for instance, use the mobile money platform to pay for goods at the supermarket till and send the exact value of the good sold or service rendered thus eliminating the additional charges that have sustained cash as the most popular means of payment in the country.
By fixing its commission at 1.5 per cent, Safaricom is directly attacking the credit cards market where commissions stand at between three and five per cent – making it the cheapest means of making cashless transactions in the country.
“Traders currently pay between three and five per cent for credit card transactions but Lipa na M-pesa will charge only 1.5 per cent commission, so we will be competing with cash payments and credit cards,” said Bob Collymore, the Safaricom chief executive.
Safaricom’s General Manager for Financial Services, Ms. Betty Mwangi-Thuo noted that by adopting M-Pesa as a primary tool of transaction, traders will not only have ready access to more than 17 million M-pesa customers, but they will also be able to provide their customers with a safer and more convenient way of making payments.
“By using the M-pesa payment services, traders will handle less cash and will therefore be less susceptible to risks associated with cash handling such as theft and fake currency. In addition, Lipa na M-pesawill also help traders enhance business efficiency,” said Ms. Mwangi-Thuo.
“Lipa na M-pesa is one of the ways through which we want to make mobile money work in micro-transactions.” said Collymore.