Safaricoms M-Pesa tipped to withstand disruption from WhatsApp Pay analysts

Safaricom’s mobile money service M-Pesa has been tipped to weather the disruptive storm from the recently launched Facebook Inc. owned-WhatsApp Pay due to its deep integration.

Analysts at Genghis Capital say the dominant local mobile money service key competitive edge against WhatsApp Pay and other upcoming mobile money applications are its deep integration and seamlessness with the existing financial ecosystem.

“M-pesa has got existing interoperability, integration and relationships with business services including banks that allow Customer-to-Business and Business-to-Business transactions. Interoperability with the existing financial ecosystem will be critical to success of WhatsApp Pay as a challenger,” they noted.

Further, the analysts expect M-Pesa’s ecosystem of value added services including lending and savings to offer the platform the edge against the competition.

“Growth of M-Pesa has mainly been from the ‘new business’ channels which includes KCB M-Pesa, M-Shwari and Fuliza against the traditional channels; withdrawal charges and peer-to-peer charges,” they added.

Earlier this week, the announcement of the WhatsApp payment service by Facebook CEO Mark Zuckerberg reverberated across the world due to its sheer scale of usage of the platform which averages 500 million daily users and two billion monthly users in 180 countries.

WhatsApp Pay has its attraction drawn from its ubiquity in its integration with Facebook’s Inc. popular social media platforms with the key target of the service being e-commerce platforms.

The newbie payment solution is therefore seen as a formidable challenger in the Kenyan mobile money scene where payments are still under-utilized in comparison to funds transfer.

“The large opportunity coupled with the popularity of the social media platforms, one could not but wonder whether the social media giant will be an intimidating risk to the dominant M-Pesa ecosystem,” notes the analysis by Genghis.

However, the new platform will initially be linked to users of Visa or MasterCard credit or debit card a feature which likely limit will use to bank customers only.

At the same time, WhatsApp Pay is seen as easily resonating with the social-media savvy generation and is seen to succeed with zero or near-zero transaction costs due to its scale.

M-Pesa is Safaricom’s cash cow with total revenue from the service having hit Ksh.84.4 billion in the telco’s financial year ending on March 31.

The value of M-Pesa transactions in the period was tabulated at Ksh.13.9 trillion having grown by 18.4 percent from the previous year.

Moreover, the volume of M-Pesa transactions stood at 8.9 billion in the twelve months.

One month active M-Pesa customers stood at 24.9 million with each customer carrying an average 12.9 chargeable transactions per month.

M-Pesa’ underlying revenue are seen in new businesses including savings platform-M-Shwari and lending in Fuliza and M-Shwari.

Other contributors to the growth include international money transfers under PayPal and Alipay.

On its part, WhatsApp will be seeking to draw on its social media utilities as the platform registers popularity in emerging markets with the largest number of users such as India at 200 million and 120 million in Brazil.

The popularity has informed the payment platform’s first launch in Brazil earlier this week.