July 07, 2020

Is Equitel out to Topple Safaricom’s M-Pesa?


By Telford Aduda

When the fight against the HIV/AIDS pandemic in Kenya was stepped up, the famous expression ‘pamoja tuangamize ukimwi’ was formulated, and every Kenyan regardless of tribe, race or even economic background took their position and united in contributing to ending the spread of HIV/AIDS. And the trend has been replicated with varying degrees of success since then against hyacinth growing on Lake Victoria, famine in Turkana and even solidarity in the face of disaster. The formula is simple, unite Kenyans and give them a cause.

There has been a twist in the mobile money market after Equity Bank stepped up competition for mobile money customers by making it free for its subscribers to send money to Airtel subscribers and within its network while capping fees charged on transfers to other banks at Ksh. 200. This move can be seen as a smart move to outdo the more dominant mobile money giants Safaricom.

Users of the new service (Equitel) will send any amount of money to customers within the bank and up to Ksh. 1 Million from their mobile phones to other banks, a significantly higher sum than the current maximum transfers of Ksh. 140,000 per day on Safaricom’s M-Pesa, which can only be done in two instalments.

Customers sending money to rival banks will be charged amounts starting from a low of Ksh. 0.75 for the smallest transfer which is Ksh. 50. Customers will also pay a flat fee of Ksh. 100 for withdrawal of cash over the bank counter or Ksh. 25 for those using ATM cards.

Safaricom charges transfer fees are between one shilling and Ksh. 110 for transactions within its network and between Ksh. 44 and Ksh. 303 for unregistered users, which includes subscribers on rival networks which is capped at Ksh. 35,000.

M-Pesa withdrawal fees also move up depending on the size of the transaction, with withdrawal below Ksh. 50 being free while those exceeding Ksh. 50,000 are charged at Ksh. 330.

The Equitel service now joins the mobile money customer competition in Kenya as a bigger competitor (if not a threat) to the big fish in the market, M-Pesa, a well-known money transfer platform offered by Safaricom and which has been a key pull for customers on the telecommunications giant network.

“People need to learn to compete on products, prices, services and attitude towards people,” said Equity Bank Chief Executive James Mwangi during Monday’s launch.

According to the Equity Bank top management, it had signed up to one million subscribers during the pilot stage which saw it close the 0763 prefix and move to 0764 prefix.

Equitel subscribers will be required to hold an account with Equity Bank. The mobile virtual network operator is selling the thin-sim card at Ksh. 600 each which will allow a subscriber to access mobile networks. Airtel will earn a levy from each call made from the Equitel platform.

Equity is using Airtel’s infrastructure to offer voice, SMS and data services to subscribers. The cost of making calls on Equitel platform is Ksh. 4 and the cost for sending SMS is Ksh.1.

Bob Collymore, Chief Executive of Safaricom said that they (Safaricom) welcome competition because it is a true indicator of the free and robust operating environment we have in Kenya.

Airtel Kenya has introduced a raft of new services and partnerships in recent months targeting a larger market and in turn luring some Safaricom customers into their fold. These services include the upgraded 4G data network in Nairbi and it’s environs with upgrades in other parts of the country to follow, offering insurance cover to loyal customers and now the partnership with Equity Bank to boost mobile money services. It might not seem like much but against a backdrop of complaints from some Safaricom users with regards to certain services, one is tempted to ask; Is Airtel out to topple Safaricom?

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