Mpesa business

An insight into Safaricons Mpesa operators business

A lot of people having seen the proliferation of mpesa shops all over always wish they would also join the fray of “happy” mpesa operators and share in the profits. However, a deeper look into the business will unveil a different picture altogether. The following are the challenges faced by business operators in this business.

Low commissions – This is the number one problem that an mpesa investor realizes. The commission structure is such that Safaricon gets to keep the lions share when they charge their customers transaction fees but only pay a paltry amount to the mpesa agents who actually do the donkey work for a whole month. The return on investment on mpesa business is so low that a lot of traders have realized that an mpesa shop cannot be able to pay its rent, utilities and employee sustainably and that is why it is the trend nowadays that the mpesa service is enclosed in a corner in a shop dealing with other merchandise or service. In other words mpesa has become a support business rather than being the main business. Again the proliferation of mpesa outlets has not helped matters either. However, this is not to say that there is not enough money for everyone since safaricon declares billions in profits every year. It is only that safaricon has skewed the sharing of these profits to ensure that they keep most of them and leave only bread crumbs for the people who do all the work.

Commision clawback (stealing of commission) – This is perhaps the most disheartening of mpesa operators problems. Safaricon engages in this unfair and almost illegal practice of deducting commissions from agents in the name of penalties for facilitating direct deposits and remote withdrawals. While the two practices are indeed a revenue loss to safaricon, they are fueled by the urge of customers wanting to escape safaricons exorbitant transaction charges and will mostly try cheating the mpesa operators into depositing directly to other numbers pretending to be their own or withdrawals made by persons who are far from the shop with someone else receiving the cash but pretending to be the one who has made the withdrawal from within. Although safaricon argues that this can be curbed by insisting that customers produce their identity cards to counter check with the mpesa messages, this only puts mpesa operators into conflict with their customer especially the genuine ones who do not like being treated with suspicion. Of course it’s easy for safaricon to argue this way since the do not face the actual customers. Needless to say that if safaricon wanted they can disable these transactions directly in the system such that no one would be able to perform such a transaction successfully and therefore there would be 100% compliance without the agents having to loose their hard earned commissions. However, safaricon is not doing this since they take this as an avenue to save on costs by withholding as much agent’s commissions as possible

Fraud and theft – Today in Kenya there is no business that is as prone to fraud as the mobile money transfer business. A lot of conmen are on the prowl preying on unsuspecting operators, customers, institutions etc. All these form a significant portion of mpesa operator’s losses. It is far too easy to loose money to these criminals who are ever coming up with ingenious new ploys of deceit. Furthermore most use safaricon lines unabated and these lines never get blocked (remember the infamous kamiti lines). Also for example once you deposit or send money to a wrong recipient and the recipient withdraws it then safaricon claims they cannot help and you have to follow up the matter with the police. Knowing our overwhelmed justice system this is next to impossible and will cost you even more money to try to recover the initial loss. Also armed robbers are increasingly targeting mpesa shops in their false belief that they hold lots of cash while in real sense the small traders hold very minimal float of a few thousands. The risks versus returns in this business are simply not worth taking.

Stringent licencing and regulations – Mpesa business faces a lot of stringent licencing and regulatory regime to operate. Initially there is the branding and security features i.e. metal grills and all for security (which is overrated anyway) to having high business permits licence fees mostly twice a normal shops rates charged by local governments who seem to believe that mpesa businesses are cash cows. This result in high operation costs that cannot be recovered from the meager commissions paid.

System failures – Although this does not occur often, when it does it costs operators losses since system delays discourage customers from transacting. Also the system at times reverses transactions meaning that for a customer who had withdrawn money and was given cash, the system will reverse the transaction crediting back the customers account and debiting the mpesa operator yet the customer already received cash and left. It the customer withdraws the same amount again elsewhere then safaricon does not help the operator recover meaning it’s a loss to him although the whole problems was safaricons system fault. Why should they set the system to reverse any transaction itself without human interference? Again sometimes reaching customer care during times of crisis is usually imposible or simply takes too much time

Conclusion – Mpesa business both as an agent or a sub agent is simply not worth it. Returns are low and risks are too high. You would rather put that money in another worthwhile venture


This is a good read.

Ungeachia hapo.
You cannot survive on MPESA business alone…but you can use it to attract customers to buy your other goods.

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Mpesa is not intended to be a ‘stand-alone’ kind of business.

As in real estate, there are three important things,

  1. Location
  2. Location
  3. Location.

The main reason why it cannot stand alone is because of the low commision structure plus commission clawbacks. Location itself is nothing in the face of a low commission structure by safaricon. Remember the more prime the location the higher the rent

Even in the absence of ‘clawback’ it still wouldn’t stand alone. For it to do so, the commissions would be high and where do these come from? Transaction fees of course!!

The man with the gold makes the rules

What is clear is that safaricon is an exploitative capitalist organisation and this can be seen in its many products especially the expensive internet and bundles saga. The only reason the con survives is because the competition fails miserably. Even profit margins on airtime is negligible, for example the ksh 100 card gives you ksh 5 only. The get to keep a whooping 95 for which if you deduct tax n costs then you realise on that card the keep at least ksh 65. And what are their costs? Negligible. Si afadhali uuze mikate. All the same they keep crucial communication costs deliberately high for this economy at the persuit of mega profits. I blame lack of proper regulatory framework. Just like the banks and the interest rate spread

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The government has failed to protect it citizens from all corners.
Si terrorist, muggers, carjackers, rapist, corporate exploitation, land grabbers, corrupt public service, drug dealers and peddlers.
It is terrible bussiness being a Kenyan citizen.

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The government is there to protect and facilitate business for Safaricom and its owners and other similar entities. The government is there to keep you and others like you from destroying the green monster, landgrabbers, drug dealers etc.

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