Safaricom Halts M-PESA Transfers to Unregistered Users

Safaricom, the leading telecommunications company in Kenya, has implemented a new policy that prohibits customers from sending money to unregistered individuals on its mobile money service, M-PESA. This change will also impact unregistered users of mobile money services on Airtel Money and T-Kash. Airtel Money is associated with Airtel, another major telecommunications provider in Kenya, while T-Kash is the mobile money product operated by Telkom, the country's third-largest operator.

The decision to restrict money transfers to registered users is likely aimed at enhancing security measures and ensuring regulatory compliance within the mobile money ecosystem. This move aligns with efforts to curb fraudulent activities and promote a more secure and accountable financial environment for users of these mobile money services in Kenya.

According to a statement from Safaricom on its X account, M-PESA users will no longer have the capability to send and receive money across different mobile money providers such as Airtel and T-Kash. This marks a notable change from the previous practice where M-PESA allowed customers to send money to unregistered Safaricom customers. In this context, unregistered refers to individuals without registered M-PESA accounts.

This adjustment in policy indicates a shift in the interoperability of mobile money services in Kenya, limiting cross-provider transactions. The decision may have been implemented for reasons related to security, compliance, or other regulatory considerations, aiming to ensure a more controlled and accountable mobile money environment for users.

While M-PESA did not provide a specific reason for the recent rule change, there is speculation that it could be linked to security concerns. The theory suggests that unregistered SIM cards might facilitate the movement of mobile money in ways that are sometimes untraceable, prompting the need for stricter measures.

Over the past three years, there have been efforts by state agencies in Kenya to address the dominance of M-PESA. As of September 2023, mobile money subscriptions reached 38.1 million, with Safaricom's M-PESA holding a significant market share. In the second quarter of 2023, M-PESA's market share was reported at 96.5%, followed by Airtel Money at 3.4%, and T-Kash at 0.1%. This data highlights M-PESA's overwhelming presence in the Kenyan mobile money market and the potential regulatory efforts to foster more competition and address security concerns.

Amidst calls to categorize M-PESA as a dominant player in the market, the Central Bank of Kenya (CBK) advocated for mobile money interoperability. In 2022, besides enabling the transfer of money across different platforms, merchant and paybill services were also made interoperable. Despite these changes, there hasn't been a significant acceleration in the adoption of Airtel Money and T-Kash, possibly due to their limited agency networks where customers conduct cash withdrawals and deposits.

M-PESA has faced challenges recently with inconsistent service availability, leading to customer complaints on various social media platforms. Unlike its usual customer-first policy, the telco has not been transparent about the cause of these outages. This departure from transparency may impact M-PESA's reputation, which has been a key factor in its popularity among millions of Kenyan users.