M-PESA Faces Decline As Airtel Money Gains Traction in Kenya

M-PESA is experiencing a decline in market share in Kenya, dropping to 91% as it loses ground to Airtel Money, which has increased its share to 8.9%. Factors contributing to this shift include Airtel Money’s lower transaction fees and strategic partnerships with retailers. Despite these changes, M-PESA remains the leading mobile payment service with over 34 million users.

In recent developments within the Kenyan mobile money sector, M-PESA, traditionally the dominant force, is witnessing a decline as Airtel Money gradually increases its market presence. Mobile money services have become essential for financial transactions in regions with limited banking access, with M-PESA being a pioneer in this field in Kenya.

The Communication Authority of Kenya reports that M-PESA’s market share has diminished for the fifth consecutive quarter, dropping 2.3 percentage points to 91% in Q4 2024. In contrast, Airtel Money has experienced growth, increasing its share from 7.6% to 8.9%. This growth is notable given that Airtel Money only commenced operations in Kenya three years ago.

Affordability appears to be a significant factor in this shift. Airtel Money charges KES 11 ($0.085) to send KES 1,000 ($7.7) to other services, while M-PESA charges KES 13 ($0.093). Additionally, withdrawal fees on Airtel Money are slightly lower, with KES 29 ($0.22) as opposed to M-PESA’s KES 31. Airtel Money’s aggressive promotions and broadening of its agent network are contributing to its increase in customer base.

Furthermore, Airtel Money has expanded its accessibility by collaborating with large supermarket chains such as Naivas to establish deposit and withdrawal points. While M-PESA still leads with over 160,000 agents nationwide, Airtel’s strategic partnerships enhance its competitive edge.

The decline of mobile money services is not restricted to Kenya. In Nigeria, MTN’s MoMo PSB reported a loss of 2.5 million users in 2024, showcasing broader challenges in the African mobile financial sector. MTN has also seen a significant drop in revenue, now at $2.26 billion, indicating financial pressures exacerbated by currency depreciation.

Despite these challenges, M-PESA retains its status as Kenya’s primary mobile payment platform, boasting over 34 million users and processing upwards of 30 billion transactions valued at approximately KES 40 trillion ($308.8 billion). Although Airtel Money has around eight million registered users, its strategic initiatives signal a promising potential for growth in the future.

In summary, the mobile money landscape in Kenya is evolving, with M-PESA’s declining market share presenting opportunities for competitors such as Airtel Money. The affordability of transactions, strategic partnerships, and targeted promotions are key factors influencing this shift. While M-PESA remains a dominant player, its ongoing challenges may prompt further strategic adaptations to retain its position in the market.

Original Source: www.techloy.com