Banks Move To Protect Their Slice Of Africa’s Mobile Payment Pie

In 2007 m-Pese launched in Kenya and changed the face of money transfer on the continent of Africa. Today, the mobile payment service handles $18 billion in transactions annually, mostly from the nation’s small business owners—tech entrepreneurs cab driver and cow herders who taken together comprise 43 percent of the nation’s economic output, reports The Wall Street Journal.

Unsurprisingly, Kenya’s top bank—Equity Bank—wants a piece of the action in the form of the big business of charging fees on all those mobile transactions. The bank,however, wants more than the customer transferring funds on the go. They want to get those mobile customers settled into regular banking services like savings accounts and loans.

Equity has acquired a telecom license and is planning to distribute SIM cards to customers that would grant full access to their accounts virtually. The cards would also functionally give any Equity customer access to their home bank’s services, while another would give access to M-Pesa services.

Earlier this year, Equity acquired a telecom license and made plans to distribute to its customers SIM cards that would enable them to access all their accounts without visiting a branch. The ultrathin cards are designed to be placed on top of any SIM card already in a user’s phone, effectively giving people one phone line linked to Equity’s bank service and another for Safaricom’s voice and M-Pesa services.

“We have a major problem with the mobile provider also providing financial services,” said John Staley, Equity’s chief of finance, innovation and technology, reported The Journal. “You can’t have a freight company controlling the tracks.”

Equity’s roll into the market, however, may not be totally smooth. Iin July, Safaricom filed a petition with the Kenyan communications regulator. The complaint claims Equity services that are designed to coexist with Safaricom may put M-Pesa users at risk of fraud. Equity has called the accusations unfounded and a “stalling tactic.”

Although fewer than 25 percent of Africans have a bank account, almost half have a mobile phone, according to data from the World Bank. Worldwide, 4,361 out of 100,000 people globally were using mobile-payments services as of June 2013, but in Africa, the numbers were almost six times that, according to Groupe Speciale Mobile Association.