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- Published on Monday, 15 May 2017 15:12
Telcos will create a central pool of funds from which they will draw money to pay each other once mobile money interoperability is in place.
Safaricom chief executive officer Bob Collymore said the plan to set up mobile money interoperability was at an advanced stage and would come into fruition within three months.
Under the plan midwifed by the Ministry of Information, Kenyans will be able to seamlessly send money across mobile money networks.
However, it has until now been unclear how Safaricom, Airtel and Telkom Kenya were going to settle debts incurred as money moves from one network to another.
“In simple terms it will be like prefunding a pay bill account. The three of us as operators… will put our money together and when customers move money, we’ll be able to withdraw what we’re owed from the account,” said Mr Collymore.
He explained that the operators had settled on the pool of funds to avoid delays in settling debts, which could have adverse effects on the whole system.
However, the operators have not agreed on exactly how much money to put into the fund given the stark difference in market share among the three large mobile money companies.
Safaricom, the market leader, has 67.4 per cent market share by subscriptions while Airtel has 21 per cent and Telkom Kenya has less than one per cent.
Mr Collymore said the three companies had also agreed not to pay interconnection fees for terminating transactions on each other’s network, as they usually do whenever a customer makes a cross-network phone call.
Safaricom stands to lose from a scheme where no interconnection fees are paid because it will arguably be the end-point for most cross-network transfers.
However, Mr Collymore said that he did not expect the interoperability to significantly affect the direction of Safaricom traffic. Telkom Kenya and Airtel did not comment.
In signing an agreement to connect their mobile money networks, the operators will be forestalling a regulator-led action to address concerns about the lack of competition in the sector.
Earlier this year, a draft report on competition in the telecommunication market called for interoperability to be enforced before the end of the year.
Failing this, the largest operator, Safaricom, would see its mobile money business, M-Pesa, hived off into a separate company.
However, the ministry of information ruled out the possibility of the company being split and has instead favoured an industry-led solution to the problem.
