New mobile payments provider Equitel heats up competition in Kenya
July 30, 2015: In Kenya, it is unbelievably easy to complete transactions using a simple mobile phone handset. Such is the success of M-Pesa, Kenya’s pioneering mobile payments platform, that the country has been thrust in the unlikely position of a global leader in mobile payments.
In fact, M-Pesa saw an estimated £17bn worth of transactions in Kenya in 2014, according to data from the Central Bank of Kenya (CBK). The data shows that most of the total amount transacted was spent on utilities, rent, school fees and in retail, as well as money sent and received between individuals, demonstrating how a cashless economy is taking shape in the country.
At the end of 2014, there were 25 million mobile payment subscribers in Kenya (equal to almost the entire adult population) with over 121,000 agents where money can be paid in or taken out.
But a new mobile payments platform dubbed Equitel, which was launched in July by Equity Bank Kenya, is stirring the local mobile payments market, estimated to be worth billions of shillings.
If data from the CBK report is anything to go by, the value of mobile payments last year grew by nearly a third to Kshs1.1 trillion in the first six months of the year, compared to Kshs872.1 billion the previous year. This means that consumers moved an average of Kshs6.2 billion per day.
Such hefty amounts have attracted new players keen on tapping this market as mobile payments continue to grow.
At the time of Equitel’s official launch in July, more than 1 million subscribers were already using its services. Of these, 69% active subscribers were reportedly acquired through issue of free SIM cards to Equity Bank’s 8.7 million customers. But why is Equitel turning out to be a major hit, only months after its piloting?
“Equitel is providing the bank with another opportunity to continue our mission of offering inclusive, innovative, customer-focused financial services that transform livelihoods, give dignity and expand opportunities,” said Equity Bank Group CEO Dr. James Mwangi, adding that the company has put up an elaborate plan to further boost financial inclusion that transcends limitation of banking time and location.
Equitel is the first platform in Kenya and Africa to offer a full banking suite without building new mobile infrastructure. Commonly known as a Mobile Virtual Network Operator (MVNO), the service combines mobile and banking in a fresh, ground breaking way.
The new platform is offering users a choice with SIM cards ranging from standard size SIM, micro, nano and thin SIM based on their requirements.
Equitel ventured into the mobile money transfer space with the registration of its own MVNO, Finserve Africa that runs Equitel.
Through this platform, the bank seeks to open up internet banking to the masses by providing solutions to enable more Kenyans with feature phones access banking services.
Kenya has six main mobile money platforms-Safaricom’s M-Pesa, Airtel Money, YuCash, OrangeMoney, Mobicash and Tangaza Pesa.
Equitel’s venture is viewed as a game changer meant to cut down Safaricom’s dominance by introducing lower priced solutions to the market.
Currently, despite the growth of mobile payments, many consumers still decry the high cost of sending and receiving money through mobile phones. Equity bank says it will not charge a fee for its services on its ecosystem.
Dr. Mwangi is upbeat that Equitel will emerge as the next big mobile payments player in the near future. “We will be leveraging the bank’s presence across the region to roll out Equitel and this is the basis of optimism of attaining a subscriber base of over five million by the end of 2015.”