KENYA’s Financial Services landscape has grown over the years with the East African Country a Global-Pacesetter in Mobile Money through Safaricom PLC's M-PESA, a profitable business venture due to the widespread adoption of mobile money services across the country.
Agents earn commissions from transactions including deposits, withdrawals, and bill payments, with the volume of these transactions being significantly high given M-Pesa’s dominance in the market. The convenience and necessity of M-Pesa services ensure a steady stream of customers.
In this Article we will look at the various aspects of establishing an M-Pesa business, from profitability, costs to challenges faced by agents :
How The M-pesa Business Works.
The M-Pesa business in Kenya operates by enabling agents to facilitate mobile money transactions for their customers.
Agents have a mobile phone loaded with an M-Pesa Sim card line and registration details. Customers visit these agents to deposit or withdraw money from their M-Pesa accounts, transfer funds, pay bills such as school fees, and purchase goods and services.
The agents earn a commission on each transaction they process, which is paid by the Service Provider, Safaricom PLC, (via bank or telecom companies). To ensure smooth operations, agents must maintain sufficient liquidity both in cash and in their M-Pesa e-wallets to handle customer demands.
The system is regulated to ensure security and compliance with financial laws, making it a reliable and integral part of Kenya’s financial ecosystem.
Why investing in M-pesa business is a good idea.
Investing in an M-Pesa business in Kenya offers numerous advantages due to its established and growing presence in the financial services sector.
Since its launch, the Mpesa platform has evolved from handling basic payments and transactions to a comprehensive financial ecosystem that offers offers credit, savings, investment solutions, wealth management, and insurance
Below is why you should invest in the MPesa agent business in Kenya;
High Demand: M-PESA has over 34 million subscribers in Kenyas. They users rely on it for many daily transactions such as money transfers, bill payments, and airtime purchases. This high demand for M-Pesa services ensures you a steady stream of customers and profits.
Agent Network: Safaricom have over 300,000 agents nationwide. M-Pesa agents earn commissions on every transaction, including deposits, withdrawals, and money transfers.
Market Share: M-PESA’s has a strong market share, commanding a 93.4% share of the Kenyan Mobile Money Market by June 2024.
Business Support: M-PESA supports over 1.5 million micro, small, medium, and large enterprises through its merchant payment options beyond basic transactions.
How To Start A Mpesa Business In Kenya.
Starting an M-Pesa business in Kenya involves 8 steps, but with careful planning and execution, it can be a rewarding venture. Here’s a concise guide to help you get started:
Understand the M-Pesa System: Familiarize yourself with how the MPesa system works and its significance in Kenya’s financial landscape. Research the services offered, transaction fees, and the role of M-Pesa agents.
Meet Eligibility Criteria: Ensure you meet Safaricom’s eligibility requirements, which typically include being a registered Kenyan business entity, having a valid national ID or passport, and meeting minimum capital requirements.
Prepare Documentation: Gather necessary documents such as your business registration certificate, personal identification, bank statements, and proof of address for the business location.
Choose a Location: Select a strategic location for your MPesa business, preferably in areas with high foot traffic such as markets, shopping centers, or busy urban areas. Ensure it complies with local regulations.
Submit Application to Safaricom: Apply to become an MPesa agent through Safaricom’s official channels. Complete the application form accurately and attach all required documents.
Training and Approval: If your application is approved, you will undergo training provided by Safaricom on how to operate the M-Pesa system, handle transactions, and comply with regulations.
Set Up Your Agency: Once trained, set up your M-Pesa agency with the necessary equipment provided by Safaricom, including a mobile phone with an M-Pesa line and other tools required for transactions.
Provide Excellent Customer Service: Focus on delivering excellent customer service to build trust and loyalty among your clientele. Ensure smooth and efficient transactions while maintaining security measures.
How Much Do Mpesa Agents Earn Per Month?
M-Pesa agents in Kenya typically earn between KSh 20,000 and KSh 100,000 per month, depending on factors like location and transaction volume.
M-PESA Agents Commission.
Safaricom occasionally updates the commission rates for M-Pesa transactions. These changes are made at their discretion, but the company ensures agents are notified in advance to prevent misunderstandings.
Below is the latest breakdown of M-Pesa deposit rates:
Deposit Bands (Ksh) Agent Commission
50 – 100 = 4
101-510 = 8
511 – 1,010 = 9
1,011 – 1,510 = 10
1,511 – 2,510 = 11
2,511 – 3,510 = 12
3,511 – 5,010 = 14
5,011 – 7,510 = 20
7,511 – 10,010 = 28
10,011 – 15,010 = 40
15,011 – 20,020 = 55
20,021 – 25,020 = 71
25,021 – 30,020 = 87
30,021 – 35,020 = 103
35,021 – 40,020 = 119
40,021 – 45,020 = 135
45,021 – 50,020 = 150
50,021 – 70,000 = 190
70,001 – 150,000 = 190.
M-Pesa withdrawal commission rate.
As an M-Pesa agent, you’ll earn more from withdrawal transactions since they offer higher commissions than deposits. Here’s the latest breakdown of the commission rates for withdrawals:
Transaction amount (Ksh). Commission.
10 – 49 N/A
50 -100 = 5
101 – 500 = 8
501 – 1,000= 10
1,001 – 1,500= 12
1,501 – 2,500 = 15
2,501 – 3,500= 20
3,501 – 5,000 = 25
5,001 – 7,500 = 30
7,501 – 10,000 = 35
10,001 – 15,000 =45
15,001 – 20,000 = 60
20,001 – 25,000= 65
25,001 – 30,000 = 70
30,001 – 35,000 = 70
35,001 – 40,000 =100
40,001 – 45,000 =150
45,001 – 50,000 = 180
50,001 – 150,000 = 200
M-Pesa Transaction Charge when Using an ATM.
Taking cash out with an ATM card comes with fees, depending on how much you withdraw.
If you withdraw between 200 Ksh and 2,500 Ksh, you’ll pay a fee of 35 Ksh.
For withdrawals from 2,501 Ksh to 5,000 Ksh, the charge is 69 Ksh.
If you take out between 5,001 Ksh and 10,000 Ksh, the fee is 115 Ksh.
For amounts ranging from 10,001 Ksh to 35,000 Ksh, you’ll pay 203 Ksh.
How to Increase M-Pesa Commission.
To boost your M-Pesa commission, there are two effective strategies you can use. First, choose a location with good foot traffic. The more people who visit your shop, the more transactions you’ll make, which leads to higher earnings.
Make sure your shop is in a busy area, but also ensure it’s clean, well-decorated, and offers great customer service. A pleasant environment will draw in more customers and encourage them to return.
Second, consider getting an aggregated Safaricom M-Pesa line. This line type was introduced to help agents avoid fraud, ensuring that no one claims more than their fair share of commission.
Both new and existing agents can apply for aggregated lines, and they come with the advantage of earning a larger commission. With an aggregated line, you get 80% of the commission, while 20% goes to your principal agent. This is much better than the 40% less you’d earn with a regular line.
How to Check your M-Pesa Agent Commission.
If you’ve figured out how to boost your M-Pesa commissions, the next step is learning how to check and withdraw them. Here’s a straightforward guide to help you do just that:
Open your Safaricom App.
Tap the option labeled “Show my commission balance.”
Enter your M-Pesa PIN when the prompt comes up.
Wait for a confirmation SMS with details of your commission balance.
Once you’ve checked your balance, withdrawing your commission is simple:
Confirm that your agent account has enough float.
Go back to your Safaricom App.
Select “Withdraw commissions.”
Input the agent’s number.
Enter your M-Pesa PIN to complete the process.
How much float do I need to become an M-Pesa agent?
To start, agents require a minimum float of around Ksh 100,000, depending on their location and expected transaction volumes.
Is there a monthly target for M-Pesa agents?
Yes, Safaricom often sets monthly transaction targets. Agents who meet or exceed these targets may qualify for bonuses.
Can agents earn commissions from deposits?
Yes, although deposit commissions are lower compared to withdrawals.
Do agents incur any costs?
Agents must maintain their float balance and may incur costs for rent, licenses, or additional equipment.
How To Manage Float in An M-Pesa Business?
To manage float in an MPesa business in Kenya effectively, start by allocating a substantial initial float, typically between KSh 100,000 and KSh 200,000, and maintain a balanced allocation between cash and e-value based on transaction patterns.
Regularly monitor and analyze transaction data to understand peak times and adjust your float accordingly.
Perform daily reconciliations to track balances accurately, set minimum and maximum float thresholds to prompt timely replenishments, and schedule these during non-peak hours to avoid disruptions.
Implement robust security measures to protect your float, train staff on proper float management practices, and use technology tools provided by Safaricom for real-time monitoring.
Additionally, have an emergency backup plan for accessing additional float if needed to ensure continuous and efficient service.
Where to Locate your M-pesa Business In Kenya?
To determine the best location for an M-Pesa business in Kenya, focus on areas with high foot traffic and significant residential density, such as markets, shopping centers, and busy urban streets, where many potential customers are likely to frequent.
Ensure your location is easily accessible and visible, with good road access and proximity to public transportation. Consider the safety and security of the area to protect both your business and customers.
Assess the level of competition in the vicinity to avoid oversaturation, while also looking for underserved areas where there is a high demand for financial services.
Finally, ensure the location complies with local zoning laws and regulations for operating an M-Pesa business.
What Challenges Do M-Pesa Businesses In Kenya Face?.
M-pesa businesses face several challenges in its operation in Kenya
Security Risks: MPesa agents deal with large volumes of cash and electronic transactions, making them vulnerable to security threats such as theft, fraud, and cyberattacks. Ensuring the safety of cash and customer data is a constant challenge.
Float Management: Managing liquidity, also known as float, is crucial for M-Pesa agents to facilitate transactions effectively. Maintaining the right balance of cash and electronic money (e-value) in their accounts while minimizing cash shortages or surpluses can be challenging.
Fraud and Scams: MPesa agents may encounter fraudulent activities such as identity theft, unauthorized transactions, and counterfeit currency. Implementing robust security measures.
Transaction Fees and Commissions: While earning commissions on transactions is a primary source of revenue for MPesa agents, the fees and commissions charged by Safaricom can impact their profitability. Agents may face pressure to keep transaction fees competitive while covering their operational costs.
In conclusion.
Starting an M-Pesa business in Kenya is a promising venture with substantial profit potential. By understanding the system, meeting eligibility criteria, and providing excellent customer service, you can establish a successful and profitable M-Pesa agency.
Furthermore, if you diversify services to sell airtime, mobile accessories or facilitate utility payments, you can can increase your revenue streams for your M-pesa shop.
