Part I has come to pass with Safaricom’s new M-Pesa service enabling money transfer via cell phone.
Mzansi Kenya: The new technology does not pose a threat to banks as it operates outside banking circles. What banks should look out for is a populist attempt introduce mzansi style banking as they continue to report super profits year after year which are unfairly attributed to excessive fees they levy on their customers.
Visa, watch out: The next group to watch out for what's happening at Safaricom should be Visa and other credit card manufactures in Africa. Cell phone airtime is virtual money - which is what debit and credit cards are - enabling customers and merchants to exchange virtual payments settled days later - at a substantial fee to both parties.
With cell phones this is already happening but it's just not formalized. The Option - Safaricom's free magazine publication has a letter to the editor this month from Joe Nickson of Kerugoya (central Kenya) who paid his fare in a matatu (bus) by transferring 50 shillings airtime to the conductor's phone and he received 30 shillings actual cash as change.
Airtime offers many more possibilities - 7 million cell phone (including more post-paid cell phone customers) vs. 100, 000 credit card users in Africa. Alongside his credit card terminal, a merchant can have a terminal with a dedicated cell phone line to receive virtual payments of airtime from safaricom users making small purchases. At the end of the day, he'll be able to check his virtual balance - and either re-sell the airtime to customers or use it to purchase other goods.
Another advantage of cell phone payments is they require no background checks or credit history.
Could Safaricom go to a higher level and enable online payments to enable their subscribers to buy over the web and pay by transfering payments to a website like Mamamikes or is that already happening?