Fraud committed on the mobile-payment service M-Pesa is significantly less than traditional payment instruments such as credit cards in Kenya, according to operator Safaricom. The company disclosed in an announcement some recent fraud statistics as average fraud losses were 0.006 percent of each transaction. For customers, losses are about 0.002 percent with M-Pesa agents seeing losses of about 0.007 percent. These minimal losses stand in sharp contrast to the estimated 5 percent losses in credit card fraud, according to the Central Bank of Kenya.
Safaricom already is processing two million transactions a day. It recently extended M-Pesa’s via agreements with mobile payments solution provider Kopo Kopo, and online restaurant directory, Eat Out, to improve penetration in the local hospitality industry. M-Pesa users will now be able to pay for their dinner bills using their phones. Ben Lyon, Director of Kopo Kopo highlighted the significance of this new development by saying “as a restaurant owner, you are assured that 7-8 out of every 10 customer has M-Pesa.”
M-Pesa, however, soon may need to set a weekly limit on its transfer service to below its current mark of Sh980,000 (US$11,694.5). The Central Bank of Kenya is investigating all mobile money transfer services above Sh300,000 a week ($3,580). The bank’s investigation is spurred by the desire to fight money laundering, corruption and potential terrorism financing.
M-Pesa is arguably the most successful mobile payment service in the developing world and has been well covered by Mercator Advisory Group in the past, including a closer look at the company’s push to improve e-commerce through mobile payments. With this most recent announcement about limited fraud losses, it is another feather in M-Pesa’s cap and mobile payments in general over payment instruments like credit and debit cards. The success of M-Pesa may serve as a blueprint for other developing countries, which could see mobile payments leapfrog traditional payment instruments in terms of customer preference in the not so distant future.
Click here to read more from The Star.
