The deal, which will enable Safaricom subscribers to use the M-Pesa service to buy goods from two of Kenya’s leading retail chains, is the latest step in the firm’s leadership strategies in the mobile money transfer business.
The partnership involving Uchumi Supermarkets, Kenya’s second largest retail chain by annual turnover, and fourth-placed Naivas extends the mobile money transfer platform’s transformation into a key electronic commerce tool with the potential of upsetting the cash-based transaction system that currently dominates the country’s commerce.
Speaking at the launch ceremony outgoing Safaricom CEO, Michael Joseph, said the company was leading the way towards a mobile wallet and cash-less society where all payments would be made online, reducing the risks involved in carrying cash.
“This is yet another effort by Safaricom and partners to deepen online and cash-less payment solution in Kenya and also a first in the region,” said Joseph.
“It resonates with our company’s commitment to lead the way in innovations that improve the living standards of our subscribers, in line with M-Pesa’s ‘Bigger Than Cash’ aspirations.”
Uchumi supermarket’s chief executive, Jonathan Ciano, said Safaricom’s M-Pesa payment system is likely to gain more traction given its deep penetration and a huge subscriber which exceeds the total number of account holders in Kenya.
Ciano said about 20 million shoppers visited Uchumi’s stores last year, an indication of the high revenue potential based on the low-margin, high volume pricing model. In the year ended June 2010, shoppers at Uchumi spent Sh9.6 billion.
Dubbed Nunua na M-Pesa, the service will be available at all Uchumi and Naivas Supermarket outlets across Kenya.The service is the first of its kind in the regional market and will be enjoyed by the over 12.7 million M-PESA subscribers.
Customers will initially enjoy the service free following an introductory offer by Safaricom. The service will however attract transaction charges at the end of the offer which will be communicated to customers through the media.
Transactions in Kenya are chiefly cash-based, a situation that has been attributed to a combination of factors including aversion to debt.
As a listed company, Uchumi is the only supermarket in Kenya that publishes its annual accounts.
The Nairobi Stock Exchange listed firm projects M-Pesa revenues will grow by 158% to Sh7.56 billion by end of the current financial year ending next March, up from Sh2.93 billion last year.
BRIAN ADERO in Nairobi, Kenya