Value Addition in Mobile Money Transfer Services in Kenya: The Case of M-Pesa

Abstract

The study sought to find out how M-PESA, a value added service from Safaricom Ltd is used as a strategic tool in mobile money transfer in Kenya. M-PESA is a service launched with a straightforward feature set: the ability to send and receive money and to buy airtime for yourself and for others. The feature set has grown to include paying bills, e.g., utility bills; receiving payments, e.g., salaries; and micro-finance services, receiving and repaying loans. The purpose of this study was to determine how Safaricom Ltd uses VAS as a strategic tool on its mobile money transfer service, M-PESA. The specific objectives of the study were: to evaluate the forerunners of M-PESA value added services application for strategic purposes, to examine the specific M-PESA value added services as used for strategic reasons, to appraise the challenges affecting application of M-PESA value added services as a strategic tool and to propose strategies for improvement to be implemented.The study adopted a face to face interview of selected Safaricom strategy personnel from cross-functional departments that were purposefully sampled considering the specific roles they play. In formation gathering was done in a months' time while the study took three months to conclude.The findings of this study show that the forerunners of M-PESA paved the way for a gap to be filled in the mobile money sector. Safaricom Ltd took this opportunity to ensure that they deliver key output to satisfy their customers demand using various value added services like M-PESA. M-PESA has also been found to use strategy development to ensure that they continue to hold the top position in the mobile money technology world. Different network operators have tried to mimic what Safaricom offers but most of them do not offer the longevity that Safaricom Ltd does. M-PESA came in as an effective mobile payment services for all its users, and the development of M-PESA has not ceased as it continues to offer various services like M-Shwari, which allows users to earn interest on their savings and also qualify for loans when the need arises. With regard to the challenges facing M-PESA, it was found out that Safaricom does not use market segmentation to deliver services to its customers. The study concluded that M-PESA is a very popular service among Kenyans as it serves to increase money circulation in the economy by offering a fast and secure mode of transferring money, making payments and also borrowing and repaying loans. The study recommended that Safaricom needs to get more innovative on the Value Added Services that come with M-pesa so as to be ahead of the existing small firms and future entrants that may come into the market e.g. Equitel the newly launched mobile banking service by Equity bank .This will again require more market research to identify other needs by customers and organizations that can be resolved by M-pesa services. The study also recommended that Safaricom needs to do market segmentation for its Mpesa customer so that they are able to identify which VAS services suit which market and which market to concentrate more on .Some of the VAS services may be required more by the lower market and others by the upper market and hence the profitability may also take the same trend. The study also recommended that Safaricom does a diagnosis and carries out an assessment on their systems infrastructure so as to ensure better protective measures are in place. My recommendation would also be that Safaricom carries out campaigns on how to sensitize its customers on the precautionary measures they should take.