Zain Kenya enters the Mobile Money Transfer Market

Posted by Staff Writer on Saturday, February 21, 2009 at 6:32pm.

The fight for customers in the Kenya Mobile Telecoms market just got hotter, last month.   Zain Kenya finally got the go ahead from the Central Bank of Kenya to offer its money transfer service dubbed ‘Zap’ to the public.   Launched last week, this will end market leader Safaricom’s two year monopoly with their money transfer product, M-Pesa.   This should be good news for consumers, who will probably benefit from lower costs for the service.   Especially since these services tend to benefit the lowest income individuals who traditionally don’t have access to or utilize regular banking services.

Standard Chartered Bank, which is also taking steps to be more competitive in the retail banking industry with new value added services, will act as Zap’s trustee bank just as Commercial Bank of Africa does for M-Pesa.

Interestingly enough, when M-Pesa first launched in 2007, banks in Kenya were threatened and sounded the alarm about this new unregulated financial product.  I’m glad the government saw the real value by approving this product that provides financial services to the previously under- or unserved groups.  It seems like the interests of the government, in this case, will serve a legitimate public interest in protecting consumers as opposed to protecting incumbent firms.

Orange and Econet, the other two major mobile operators in Kenya, are working on similar projects that will also require regulatory due diligence.  There is certainly plenty of space for entrants as Safaricom is rumored to have over 5 Million M-Pesa users with transfers amounting to over Sh45 Billion shillings a year.  I’m not sure why it takes so long to get regulatory approval.  Certainly the roadblocks that slowed the approval of Zap were being watched closely by competitors.

Orange head of marketing and strategy Jean-Michel Chanut told a press conference that they were exercising caution with their plans to launch a money transfer service.  An about turn from previously announced plans to launch a similar service   He said this while launching a ring back tone service on Orange mobile that allows callers to the network to listen to downloaded music instead of the standard ring tones.

Look for more banks to get technologically savvy, and competitive through new products and partnerships with mobile operators in Kenya.