Pesalink's planned merchant payment service to rival M-Pesa

STARTUP VENTURE CAPITALJanuary 27, 2024 at 8:53 AM UTC

TLDR

PesaLink, Kenya's real-time interbank switch, is set to challenge Safaricom's Lipa na M-Pesa service in the merchant payment arena.
This move comes after Safaricom's M-Pesa system experienced outages, causing concerns among customers.
PesaLink, initially focused on facilitating financial transactions between bank accounts, plans to incorporate a merchant payment option to enhance its versatility and overall utility.

PesaLink, the real-time interbank switch operating under the Kenya Bankers Association, is poised to enter the merchant payment arena, presenting a direct challenge to Safaricom's Lipa na M-Pesa service. This strategic move comes in response to recent concerns among Safaricom customers due to a series of outages impacting the reliability of the M-Pesa system.

Established in 2017, PesaLink initially focused on facilitating seamless financial transactions between bank accounts, streamlining processes by eliminating the need for intermediaries. Acknowledging persistent customer demands, PesaLink has now announced plans to incorporate a merchant payment option into its array of services.

While the specific timeline for the rollout remains undisclosed, the addition of this feature is anticipated to augment the platform's versatility and overall utility. Operating as a mobile-first platform, PesaLink offers accessibility through bank mobile apps, internet banking, or USSD codes, positioning itself as a comprehensive solution in the evolving landscape of digital financial transactions in Kenya.

Points clés à retenir

Since its inception, PesaLink has expanded its network, now including 31 banks in Kenya. The platform has also gained traction among various payment service providers, SACCOs (Savings and Credit Cooperative Organizations), and telecommunications companies. Despite its cost-effectiveness, PesaLink has encountered challenges in achieving broad acceptance, primarily due to the significantly larger number of mobile money account holders compared to commercial bank account holders in Kenya. According to statistics from the Communication Authority of Kenya (CA), the country boasts 38,432,728 active mobile money subscriptions, reflecting a penetration level of 75.1 percent. In contrast, data from the Kenya National Bureau of Statistics reveals that 69 percent of Kenyan adults do not possess a commercial bank account. These figures underscore the hurdle faced by PesaLink in achieving widespread adoption, especially when considering the dominance of mobile money services. As PesaLink aims to compete with Safaricom's Lipa na M-Pesa, overcoming this disparity in user numbers presents a significant challenge in its quest for market share.

PesaLink

M-Pesa

Fintech

Merchant Payment

Payments