Safaricom, Kenya’s leading telecommunications provider, has entered into a strategic partnership with Mastercard to enhance payment acceptance and cross-border remittance services. This collaboration will benefit over 636,000 merchants using M-PESA, Safaricom’s mobile money platform, which has become a cornerstone of Kenya’s digital financial ecosystem. The partnership marks a significant step toward fostering greater financial inclusion and expanding the capabilities of Kenya’s merchants to operate in the global economy.

A Growing Digital Payment Landscape in Kenya

Kenya has emerged as a leader in digital payments, driven largely by the widespread adoption of M-PESA. Since its launch in 2007, M-PESA has revolutionized the way Kenyans transact, allowing millions to transfer money, pay bills, and even access credit through their mobile phones. As of 2024, mobile wallet payments in Kenya have been growing at an impressive compound annual growth rate (CAGR) of 12.7% from 2020 to 2024. This rapid growth has positioned Kenya as a key player in Africa’s digital economy, with M-PESA leading the way.

Through this partnership, Mastercard’s global payment infrastructure will be integrated with M-PESA’s extensive merchant network, enabling merchants to accept payments more seamlessly, securely, and on a larger scale. This will be particularly beneficial for small and medium-sized enterprises (SMEs) that play a critical role in Kenya’s economy but often face barriers to accessing global markets.

Enhancing Cross-Border Remittances

Cross-border remittances are a significant source of income for many Kenyans, particularly those who receive funds from relatives working abroad. In 2023 alone, remittances to Kenya totaled over $4 billion, making it one of the largest recipients of remittances in Sub-Saharan Africa. However, traditional remittance services often come with high fees and slow processing times.

By leveraging Mastercard’s infrastructure, Safaricom aims to improve the efficiency of cross-border money transfers, providing faster and more reliable services to its customers. This move is expected to lower the cost of remittances and make it easier for Kenyans to receive money from abroad, whether for personal use or business purposes.

“This collaboration with Mastercard unlocks new opportunities for M-PESA merchants, aligning with our mission to deliver innovative, customer-centric products,” said Esther Waititu, Chief Financial Services Officer at Safaricom. “By combining our expertise with Mastercard’s global acceptance network, we are enabling businesses to provide more efficient and frictionless payment solutions to their customers, both in Kenya and beyond.”

Supporting Financial Inclusion

One of the primary goals of this partnership is to drive financial inclusion in Kenya. Despite significant progress in recent years, a sizable portion of the population, particularly those in rural areas, remains unbanked or underbanked. M-PESA has played a critical role in addressing this challenge, with more than 82% of Kenya’s adult population now having access to formal financial services, up from just 25% before the platform was introduced.

By integrating Mastercard’s solutions, Safaricom will be able to offer more advanced payment options to its merchants, including contactless payments, e-commerce solutions, and digital invoicing. These services will not only improve the customer experience but also help businesses grow by offering them the tools they need to operate in a digital economy.

“We are proud to partner with Safaricom to build an inclusive digital economy that works for everyone, everywhere,” said Amnah Ajmal, Executive Vice President, Market Development, EEMEA at Mastercard. “We will enable the merchants to grow and contribute to the Kenyan economy.”

Paving the Way for a Digital Future

Kenya’s digital landscape is rapidly evolving, and this partnership between Safaricom and Mastercard is poised to accelerate the country’s journey toward a fully digital economy. With the introduction of 5G networks, the proliferation of smartphones, and increased internet access, the demand for digital services is growing at an unprecedented rate. Safaricom has been at the forefront of this transformation, continuously expanding its range of services to meet the needs of its customers.

In addition to enhancing payment acceptance and remittance services, Safaricom and Mastercard are expected to roll out new initiatives in the coming months, including plans to secure an acquiring license. This would allow Safaricom to offer even more advanced digital payment solutions, such as point-of-sale (POS) systems and mobile payment terminals, to its merchants. By doing so, the company will not only strengthen its position in the payments industry but also provide merchants with the tools they need to thrive in an increasingly digital world.

M-PESA: A Catalyst for Economic Growth

M-PESA’s impact on Kenya’s economy cannot be overstated. The platform has enabled millions of people to participate in the formal economy, creating new opportunities for businesses and individuals alike. According to a 2021 report, M-PESA’s total economic contribution to Kenya was estimated at KES 362 billion ($3.2 billion) for the 12 months through March 2021, supporting over one million jobs both directly and indirectly.

The partnership with Mastercard is expected to further amplify M-PESA’s economic impact by expanding its reach and capabilities. By offering merchants access to a global payments network, Safaricom will help them tap into new markets and grow their businesses. This, in turn, will contribute to Kenya’s overall economic development, particularly in sectors such as retail, tourism, and e-commerce.

Mastercard’s Commitment to Africa

Mastercard has long recognized the potential of Africa’s digital economy and has been investing heavily in the continent. With connections across more than 210 countries and territories, Mastercard’s global network is ideally suited to support the growth of Africa’s digital payment ecosystem. In recent years, the company has formed strategic partnerships with several African fintech companies and financial institutions to drive financial inclusion and innovation.

In Kenya, Mastercard has been working closely with local partners to expand access to digital financial services. The company’s collaboration with Safaricom is the latest example of its commitment to building a sustainable digital economy in Africa. By providing merchants with the tools they need to accept payments from customers around the world, Mastercard is helping to unlock new opportunities for economic growth and development.

Looking Ahead: The Future of Digital Payments in Kenya

As Kenya continues to embrace digital payments, the partnership between Safaricom and Mastercard is likely to play a key role in shaping the future of the country’s payment landscape. With the global shift toward cashless transactions, the demand for secure and efficient payment solutions is only expected to increase. Safaricom and Mastercard are well-positioned to meet this demand, offering merchants and consumers alike access to cutting-edge payment technologies.

The partnership also aligns with Kenya’s broader goal of becoming a regional hub for digital innovation. As more businesses and consumers adopt digital payments, Kenya is poised to lead the way in financial technology across Africa. Safaricom’s M-PESA platform, with its extensive merchant network and strong brand recognition, will be at the heart of this transformation.

In conclusion, the partnership between Safaricom and Mastercard represents a significant milestone in Kenya’s digital journey. By expanding payment acceptance and cross-border remittance services, the collaboration will not only benefit merchants but also contribute to the growth of Kenya’s economy. As the country continues to embrace digital innovation, Safaricom and Mastercard are set to play a pivotal role in shaping the future of payments in Kenya and beyond.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

20th September, 2024