Safaricom stops M-PESA transfers to unregistered users

In a recent development, Safaricom, Kenya’s leading telecommunications provider, has introduced a significant policy change impacting its widely used mobile money service, M-PESA. The company has decided to restrict customers from sending money to unregistered individuals on the M-PESA platform, thereby extending this restriction to unregistered users on Airtel Money and T-Kash as well. T-Kash, operated by Telkom, is Kenya’s third-largest mobile operator.

A communication from Safaricom on its official X account states that M-PESA users will no longer have the capability to send or receive money across different mobile money providers, including Airtel and T-Kash. This marks a departure from the previous practice where M-PESA allowed transactions with unregistered Safaricom customers.

While the exact motive behind this rule change has not been explicitly detailed by M-PESA, one prevailing theory suggests a connection to security concerns. The use of unregistered SIM cards has been known to facilitate untraceable movements of mobile money, raising potential security risks.

Over the past three years, various state agencies in Kenya have sought to address the dominance of M-PESA in the mobile money landscape. As of September 2023, mobile money subscriptions reached 38.1 million, with Safaricom’s M-PESA claiming a substantial market share of 96.5% in Q2 2023. In contrast, Airtel Money held 3.4%, and T-Kash, operated by Telkom, secured a minimal share at 0.1%.

In response to growing concerns about M-PESA’s dominance, the Central Bank of Kenya (CBK) advocated for mobile money interoperability. This initiative, implemented in 2022, aimed to allow seamless transactions across various platforms. However, despite these efforts, Airtel Money and T-Kash have struggled to gain traction, potentially due to their limited agency networks, where customers conduct cash withdrawals and deposits.

M-PESA has faced additional challenges recently, with users experiencing inconsistent service availability over the past few days. This issue has sparked complaints across various social media platforms. Notably, Safaricom has deviated from its customer-first policy by not providing upfront information about the cause of these outages, which has raised concerns among its millions of Kenyan users.

As Safaricom tightens security measures within M-PESA, the move is positioned to enhance the overall safety and integrity of mobile money transactions in Kenya. While the specifics of the security concerns remain undisclosed, it is apparent that safeguarding against potential risks associated with unregistered SIM cards has become a top priority for the telecommunications giant.

This development also underscores the ongoing efforts by regulatory bodies, such as the CBK, to foster a more competitive and inclusive mobile money landscape in Kenya. The challenge lies in encouraging the adoption of alternative services like Airtel Money and T-Kash, which may require addressing underlying issues such as network coverage and service accessibility.

In conclusion, Safaricom’s decision to restrict transactions with unregistered users on M-PESA reflects a proactive approach towards addressing potential security threats. The telecommunications company, amidst its dominant market position, continues to navigate regulatory pressures while striving to maintain a customer-centric reputation. As the mobile money landscape in Kenya evolves, stakeholders will closely watch the impact of these measures on security, competition, and user experience across various platforms.