M-PESA, Safaricom’s mobile money service, has recorded its fifth consecutive quarterly decline, facing increasing competition from Airtel Money and the broader impact of interoperability in Kenya’s mobile money market.
According to the latest report from the Communication Authority of Kenya (CA), M-PESA’s market share fell by 2.3 percentage points in Q4 2024, dropping to 91% from 93.3% in Q3. In contrast, Airtel Money expanded its market share from 7.6% to 8.9% over the same period. This shift highlights a changing competitive landscape where increased customer mobility and aggressive promotions are disrupting M-PESA’s long-standing dominance.
Interoperability and Competitive Pricing Fuel Airtel Money’s Growth
Since 2022, interoperability has made it easier for customers to transact seamlessly across different mobile money platforms, reducing reliance on any single provider. Airtel Money has leveraged this shift by offering lower transaction fees and attractive incentives such as transaction fee refunds as airtime. These initiatives have driven an increase in its customer base, as indicated by CA data.
“Subscription to mobile money services grew by 4.1 percent to 42.3 million, translating to a penetration rate of 82.1 percent during the reference period,” CA reported.
Airtel Money remains the more cost-effective option for mobile transactions. Sending KES 1,000 ($7.7) to other networks costs KES 11 ($0.085) on Airtel Money, compared to KES 13 ($0.093) on M-PESA. Withdrawing the same amount costs KES 29 ($0.22) on Airtel Money, KES 2 less than M-PESA. This pricing advantage is an appealing factor for cost-conscious consumers.
Expansion of Agent Networks and Strategic Partnerships
Airtel Money has also been expanding its agent network to improve accessibility. Through partnerships with supermarket chains like Naivas, it has introduced more points for cash deposits and withdrawals. However, M-PESA still retains a significant edge with over 160,000 agents across Kenya, ensuring its services remain widely accessible.
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The Central Bank of Kenya (CBK) had announced plans for agent interoperability, which would enable customers to access mobile money services from any agent, regardless of their service provider. However, this initiative remains unimplemented despite CBK’s commitment to rolling it out by 2024.
The Future of Kenya’s Mobile Money Ecosystem
Despite its recent decline, M-PESA continues to be the dominant player in Kenya’s mobile payments sector, with over 34 million users and processing more than 30 billion transactions worth approximately KES 40 trillion ($308.8 million). Airtel Money, with around eight million registered users, remains a smaller but rapidly growing competitor.
CBK’s planned introduction of a Fast Payment System (FPS), which will enable real-time transactions across all financial institutions, including banks and payment service providers (PSPs), could further reshape the competitive landscape. If successfully implemented, FPS could enhance customer convenience and challenge M-PESA’s market control.
As competition intensifies, M-PESA will need to adapt by enhancing service offerings, revising pricing strategies, and leveraging its extensive agent network to maintain its leadership position in Kenya’s evolving mobile money market.