Apr 2, 2013

How mobile money is working for merchant payments in Kenya

M-PESA is mostly known for P2P transactions but lately Small and medium businesses across the country have started using M-PESA for C2B (customer-to-business) payments. 

What is driving C2B payments?
The need and opportunity for use of M-PESA for merchant payments is shared by businesses and their customers. To the consumer, paying with M-PESA offers a convenient, secure way to pay. To the merchant, it offers the means to increase customer loyalty, minimize the risk of fraud or theft and lower expenses of handling cash.
M-PESA Buy Goods at Petes Coffee 

Many customers request to pay with M-PESA since they already have a balance in their M-PESA wallet.Customers can also get emergency loans from M-Shwari to fund a purchase. Banks have also made it easy for one to connect their bank accounts to their M-PESA wallet meaning that a customer can withdraw funds directly from their bank accounts to their M-PESA wallet and use it to make a purchase .

Merchant Acquisition
Safaricom is acquiring merchants through a third party – Kopo Kopo Inc.  Kopo Kopo signs up merchants and trains them on how to use the service.

Kopo Kopo also offers a software-as-a-service that enables small and medium businesses  to affordably manage mobile payments 

Pricing Model
Merchant pays a fee of 1.5% per transaction. The customer does not pay a transaction fee, meaning that Safaricom does not charge a customer for paying with M-PESA.

Safaricom offers merchants with a special kind of SIM card that is only used for showing SMS payment notification. Each business is issued with its own business number known as a “till number”. The payment is linked to a bank account meaning that once a payment has been made it can't be reversed without the merchant's permission. 

The C2B M-PESA payment service is known as Buy Goods. It is used for proximate payments at the point of sale. 

When a payment is complete, both the merchant and the customer get SMS notification from M-PESA informing them that the payment is complete.

Merchant Types
Buy Goods payments are for immediate purchases for goods and services from a merchant, that is, face-to-face C2B (customer-2-business) payments. Examples of businesses using M-PESA Buy Goods service include pubs and restaurants,bookshops,butcheries,supermarkets, salons, barbershops and pharmacies.

You can also read about various merchants accepting M-PESA Buy Goods on Kopo Kopo's blog.