M-Pesa hitch exposes risks of reliance on one provider

Major downtime on Safaricom’s financial system that affected more than 800,000 M-Pesa agents and payment merchants in Kenya yesterday has exposed the overreliance of government and businesses on a single mobile payment service.

The outage, which lasted about two hours, halted all M-Pesa transactions, affected the provision of critical government services, daily revenue collection by government agencies, and caused congestion at major payment points of various businesses and institutions.

However, the inability to transact on Safaricom’s M-Pesa App and Sim Toolkit (STK), which handled customer-to-business (C2B) payments valued at Sh2.98 trillion by the end of September, hit hard e-Citizen services, supermarkets, fuel stations, hospitals and pharmacies and learning institutions receiving fee payments.

Also, personal payments such as withdrawals from M-Pesa agents, transfers, airtime purchases, and bank to M-Pesa and vice versa could not be completed.

Safaricom, which controls close to 65 per cent of the market, did not give a notice about a scheduled system maintenance to its 32 million M-Pesa customers, unlike previous instances where such checks happened at night when transactions are relatively minimal.

“We regret there is a general outage affecting M-Pesa services on STK and App. This is being addressed with utmost priority. Apologies for the inconvenience caused,” Safaricom said on its social media pages.
e-Citizen, a government digital services platform interlinked with M-Pesa, handles a range of public services, including registration of births, deaths, driver licence, police clearance, business registration, and passport application.

The government in August directed all ministries, counties, departments, and agencies to migrate to the e-Citizen platform and use the single digital platform Paybill No. 222222 to ensure efficiency in revenue management. M-Pesa is also the only mobile payment provider that large taxpayers such as betting firms and alcohol manufacturers use to remit their daily taxes to Kenya Revenue Authority (KRA), highlighting its significance to the government’s revenue collection.

Yesterday’s disruption came at a time when schools are reopening hence more travel and huge mobile money transactions due via banks to pay school fees and do shopping at various supermarkets, bookshops, and filling stations.

“I left the office to Kilimani using a cab, but since M-Pesa was down and I didn’t have cash, we agreed with the driver to hold my national ID until the system is restored. To make it worse, I couldn’t even purchase airtime from my app to seek help elsewhere,” an affected customer told the Business Hub.

Other users were consequently forced to switch to bank money transfers, banks’ mobile apps to complete online payments, or withdraw cash at ATM machines. “We are experiencing delays on all M-Pesa to bank and bank to M-Pesa services. We shall advise you once the issue has been resolved by our partners. Thank you for your patience,” KCB Banks said in an update.

Since Safaricom controls close to 65 per cent of the market based on subscriptions, it means M-Pesa disruption left the majority of Kenyans stranded, shedding light on how delayed full mobile money interoperability between all the telcos is leaving business and government counting losses in case the dominant player faces technical hitches. Central Bank of Kenya has been pushing for a break up of Safaricom dominance and full interoperability to offer an alternative payment to many Kenyans using other networks such as Airtel and Telkom.

Currently, Airtel and Telkom Kenya subscribers can pay their bills online through Safaricom’s Lipa na M-Pesa mobile option. The reverse is not possible since Safaricom is yet to list “Lipa na Airtel Money” on its users’ end.