Vodafone launches M-Pesa payments between Tanzania and Kenya

With over 20 million Safaricom and seven million Vodacom Tanzania Mpesa customers, the two countries will be able to make seamless transactions between each other and still benefit from the low-cost of M-Pesa against existing international remittance services between the two countries.

M-Pesa customers from this two economies will also be able to use their mobile phones for simple, safe and secure money transfers between countries via an established, combined network of 180,000 agents.

“With a substantial unbanked population transacting mainly in cash, the Tanzania-Kenya corridor represents a significant opportunity for M-Pesa to give people and companies an accessible, low-cost alternative to traditional international remittances,” said Michael Joseph, Vodafone Director of Mobile Money.

According to the World Bank, formal remittances between Tanzania and Kenya were around $133 million in 2012, money which Vodafone is now seeking a slice of through the new deal.

Vodafone is estimated to have pocketed Sh1.7 billion of the Sh15.6 billion revenue that Safaricom generated from M-Pesa in the six months to September when the firm’s net profits rose 30 per cent to Sh14.7 billion.

The firm has been earning royalties of between 10 per cent and 25 per cent from M-Pesa’s annual revenues since February 23, 2007.

Vodafone says that the new partnership between Safaricom and Vodacom Tanzania presents a significant opportunity for even further growth as large populations in the two countries are still unbanked.

The cost of transferring money internationally through traditional channels like banks or money transfer operators can be up to 31% of the transaction, depending on the service provider. By comparison, using M-Pesa to transfer $50 across the Tanzania-Kenya border would cost around 1% of the transaction plus a foreign exchange fee.

As at November 2014, MPesa transactions for the 11 months of 2014 were valued at Kshs. 2.1 trillion, a 28% increase from 2013, and almost 1/2 the value of Kenya’s GDP.

Currently M-Pesa is the world’s most successful money transfer service. It enables millions of people who have access to a mobile phone, but do not have or have only limited access to a bank account, to send and receive money, top-up airtime and make bill payments. M-Pesa has a presence in Kenya, Tanzania, Fiji, South Africa, DRC, India, Mozambique, Egypt, Lesotho and Romania