Safaricom’s push to take its mobile money transfer business global ha
s received another boost with the signing of a deal that will see users of MoneyGram send cash directly to M-Pesa customers from any part of the world.
The deal, signed by Vodafone – Safaricom’s majority shareholder – will allow users of MoneyGram in about 200 countries to send money directly to M-Pesa subscribers’ mobile phones.
“There is huge demand for sending funds back (home) to family and friends,” says Michael Joseph, former Safaricom CEO and currently managing director in charge of mobile money at Vodafone.
The new deal comes just weeks after it emerged that Safaricom was on the verge of signing a similar agreement with UK-based online payments and cash remittances company Skrill, which has capacity to handle transactions and money transfers in 41 currencies.
The partnerships will see Safaricom tighten its grip on diaspora remittances, which have been a main source of commission income for commercial banks.
Diaspora remittances rose by 10.2% last year to Sh111 billion ($1.3 billion), attracting the interest of money transfer companies targeting commission fees from the transfers.
Remittances from Kenyans working abroad are the fourth-largest source of foreign exchange after tea, horticulture and tourism. The partnership between Vodafone and M-Pesa is set to be launched by June.
Safaricom is riding on M-Pesa’s wide reach of its nearly 18 million customers to win deals with the global firms.
The deal also mirrors another signed between Safaricom and international money transfer network Western Union in March 2011.
The World Bank estimates that formal channels such as Western Union, MoneyGram and Xpress Money handle about two thirds or 64% of remittances to Africa.
About 17% of the remittances are channelled through commercial banks, while foreign exchange bureaus, postal money orders and personal deliveries were used to send the remaining portion.
M-Pesa’s earlier plans to go global were delayed by concerns over stringent international regulations against money laundering and financing of terrorism.
“This agreement furthers our goal of joining with fast and reliable mobile wallets so consumers may send money for life’s essentials anywhere and any way they want, simply and conveniently,” said Alex Hoffmann, senior vice president of global product management and emerging channels at MoneyGram.