Kenyan banks have joined hands to launch a mobile and electronic money transaction service, PesaLink to rival M-Pesa in the mobile money transaction business.
The development comes nearly 10 years after the inception of M-Pesa which was initially protested by the same banks in 2007. The banks’ petition was however thrown out by the regulator.
After the regulators suppressed the banks’ concerns and gave M-Pesa a chance to launch in March 2007, banks were amongst the first players to strike partnerships with the service after its run-away success from the onset.
At least 40 banks used M-Pesa to grow their deposits, issue out loans and facilitate bills payments serving over 3.1 million customers every month.
In 2012, the banks estimated they were losing up to $22 million annually in commissions to mobile money providers such as M-Pesa and Airtel prompting them to build an independent platform.
Contrary to M-Pesa which limits daily money transfer amounts to 140,000 Kenya shillings ($1,400), banks have set the limit at up to $10,000 meaning they are likely to attract a larger chunk of high value transfers.
PesaLink transactions can also be initiated from the mobile phone, the banks’ branch, at the ATM, at agency banking outlets or via the Internet.
Users can transact up to $5 free of charge unlike M-Pesa’s feeless limit of $1. They also don’t have to rely on M-Pesa or other mobile money services and can simply transfer money from one bank account to another in real time using the banking sector platform.
M-Pesa however has a crucial competitor advantage in the ease with which it has helped millions of people access financial services. In the past many of these people were locked out because the cost of owning a bank account was way too high for them.