M-PESA Faces Continued Decline as Airtel Money Gains Market Share
M-PESA, Safaricom’s flagship mobile money service, has recorded a decline in market share for the fifth consecutive quarter. This downward trend is attributed to increased interoperability in Kenya’s mobile money ecosystem and Airtel Money’s aggressive promotional strategies, including transaction fee refunds offered as airtime. According to the latest data from the Communication Authority of Kenya (CA), M-PESA’s market share dropped by 2.3 percentage points to 91% in Q4 2024, while Airtel Money grew from 7.6% to 8.9% during the same period.
The sustained decline in M-PESA’s dominance signals a significant shift in Kenya’s mobile money landscape. Since the introduction of interoperability in 2022, customers have found it easier to switch between service providers. Airtel Money’s competitive pricing, expanded agent network, and innovative promotions have further accelerated this trend. As a result, Airtel Money is steadily eating into M-PESA’s market share, posing a growing challenge to Safaricom’s long-standing monopoly.
Despite the decline, M-PESA remains the dominant player in Kenya’s mobile money sector, with over 34 million customers and an estimated KES 40 trillion ($308.8 million) in transaction value. However, Airtel Money’s growth highlights the increasing competition in the market, driven by affordability and customer-centric strategies.
The Rise of Airtel Money in Kenya’s Mobile Money Market
Airtel Money’s growth in Kenya’s mobile money market is a testament to its aggressive marketing and customer-friendly pricing. The service has become a more affordable option for many users, particularly for transactions such as sending and withdrawing money. For instance, sending KES 1,000 (7.7)toothernetworkscostsKES11(0.085) on Airtel Money, compared to M-PESA’s KES 13 (0.093).Similarly,withdrawingthesameamountcostsKES29(0.22) on Airtel Money, which is KES 2 less than M-PESA’s fee.
In addition to lower fees, Airtel Money has expanded its agent network, partnering with major supermarket chains like Naivas to provide convenient cash deposit and withdrawal points. This strategic move has enhanced Airtel Money’s accessibility, making it a viable alternative to M-PESA. While M-PESA still boasts over 160,000 agents nationwide, Airtel Money’s rapid expansion is narrowing the gap.
The growth in Airtel Money’s customer base suggests that many new mobile money users are opting for its platform. According to the CA, mobile money subscriptions in Kenya grew by 4.1% to 42.3 million, representing a penetration rate of 82.1%. This growth indicates a thriving mobile money ecosystem, with Airtel Money capturing a significant portion of new users.
Interoperability and Its Impact on M-PESA’s Market Share
The introduction of interoperability in Kenya’s mobile money sector has been a game-changer, enabling customers to transact across different networks seamlessly. This development has significantly reduced the barriers to switching service providers, contributing to M-PESA’s declining market share. Customers are no longer tied to a single provider, giving them the flexibility to choose services based on cost and convenience.
Airtel Money has capitalized on this shift by offering attractive promotions, such as refunding transaction fees as airtime. These initiatives have resonated with cost-conscious customers, further driving Airtel Money’s growth. The CA’s sector report highlights the impact of these strategies, noting that Airtel Money’s market share increased by 1.3 percentage points in Q4 2024.
Despite the Central Bank of Kenya’s (CBK) commitment to implementing agent interoperability by 2024, the plan remains unfulfilled. Agent interoperability would allow users to access mobile money services from any agent, regardless of their provider. If implemented, this could further level the playing field, intensifying competition in the sector.
M-PESA’s Dominance Under Threat from Airtel Money
M-PESA’s dominance in Kenya’s mobile money market is facing unprecedented challenges as Airtel Money continues to gain traction. With over 30 billion transactions valued at KES 40 trillion ($308.8 million), M-PESA remains the largest mobile payment platform in the country. However, Airtel Money’s estimated eight million registered users and growing market share indicate a shifting landscape.
The CBK’s planned rollout of a new Fast Payment System (FPS) could further disrupt the market. The FPS will enable instant transactions across all financial institutions, including banks and payment service providers (PSPs). This system could reduce reliance on mobile money platforms like M-PESA, posing additional challenges to Safaricom’s market position.
While M-PESA’s extensive agent network and brand loyalty give it a competitive edge, Airtel Money’s affordability and innovative strategies are attracting a growing number of customers. As the competition intensifies, Safaricom will need to rethink its strategies to retain its market leadership.
The Future of M-PESA in a Competitive Market
M-PESA’s decline in market share highlights the evolving dynamics of Kenya’s mobile money sector. Increased interoperability, Airtel Money’s aggressive promotions, and lower transaction fees are reshaping the competitive landscape. While M-PESA remains the dominant player, Airtel Money’s growth underscores the importance of affordability and customer-centric strategies in attracting and retaining users.
As the CBK moves forward with plans to implement agent interoperability and the Fast Payment System, the competition is expected to intensify further. Safaricom will need to innovate and adapt to these changes to maintain its leadership in the market. For now, M-PESA’s future hinges on its ability to address the challenges posed by Airtel Money and other emerging competitors.
M-PESA’s journey in Kenya’s mobile money market is a testament to the sector’s growth and transformation. As the competition heats up, customers stand to benefit from more affordable and accessible mobile money services.
