The March 12 launch of T-Kash in Kenya, a mobile money service by Telkom, has set in motion a new round of competition in the market, currently dominated by Safaricom’s M-Pesa, which has more than 22 million subscribers.
There is no denying that the country is slowly moving away from bricks and mortar and embracing mobile banking, allowing customers to carry out their transactions from the comfort of their bedrooms. Essentially, what this means is that customers will have access to their money 24 hours a day, seven days a week. In the rural areas, banking services are few and far between. Consequently, the majority of the population living in the hinterland has been locked out of traditional banking services due to the long distance one needs to travel to a bank and the cost of transport. Again, bank charges remain exorbitant and way beyond the reach of most ordinary Kenyans.
It will be interesting to see how T-Kash, the new kid on the block, competes with well established brands like M-Pesa, Bharti Airtel Kenya’s Airtel Money and Equity Bank’s Equitel. For starters, this is not the first mobile money service that Telkom Kenya is launching. T-Kash is replacing Orange Money, which was scrapped eight months ago following the relaunch of the platform after private equity firm Helios bought into the company in 2016, followed by a rebrand. But that is not all. By the time it was scrapped, Orange Money had the second-lowest number of subscriptions after Mobile Pay, and the smallest agent network.
Launched with pomp and colour in November 2010, Orange Money had all the advantages over its competitors, including a debit card to pay for goods and services at shopping outlets and access to credit facilities on application. However, poor marketing strategies and limited outlets to access the services saw customers shy away. But with the relaunch, the uptake is likely to go up due to some of its unique features. For one, customers do not need an agent number to withdraw cash from a T-Kash agent as is currently the practice with other operators. Paying for goods and services does not also require a till number.
But more importantly, T-Kash has incorporated features that will relieve users of the headache of sending money to the wrong recipient. It is not lost on observers that consumers on other networks have lost millions of shillings through transactional errors. Telkom is also charging at least Sh2 lower in transaction costs as opposed to its rivals. Another competitive edge for T-Kash is that a subscriber can be able to confirm the cost of the transaction before inputting their PIN.
“The entry into mobile financial services for Telkom is, therefore, a strategic move to better utilise our infrastructure, providing customer value for current services while aligning to future market developments,” said Telkom CEO Aldo Mareuse. “Because we are fully aware that to achieve financial inclusion in the years ahead is not just about applying and building on existing products but continued innovation to better meet the needs of the excluded.”
According to industry regulator Communication Authority of Kenya’s quarter one report, 22.7 million out of the 28 million mobile money subscribers are M-Pesa customers. That notwithstanding, Mareuse is upbeat that Telkom will catch up, given that aggressive marketing activities have led to an increase of customers from two million to three million in just nine months.
Speaking during the launch of T-Kash, information, communication and technology cabinet secretary Joe Mucheru, said the government will continue to encourage healthy competition in the telecommunications sector.
“Competition is not just about breaking people down,” he said. “It is also about growing the size of the market. In all the talks we have had with the operators, their aim is to grow their sector, and we can assure you that we will see a bigger, better telecommunication’s market as we go on.”
Significantly, the launch of T-Kash comes at a time when the Central Bank of Kenya (CBK) has backed mobile money inter-operability, which when fully rolled out would allow sending of money seamlessly across networks. Currently, the recipient of money sent from a different network has to receive a text message alert to collect cash from an agent registered with the sender’s network. According to CBK governor Patrick Njoroge, the regulators are keen to mitigate any risks that might arise from cross-network money transfers. The service is set to be launched either this month or May.
“We want to be sure that this works, and that the risks are mitigated. At the end of the day the objective is to make sure that the customer gets the most benefit,” Njoroge told reporters.