Lipa na M-PESA is now the currency of small businesses

The amount of money exchanged between businesses and customers via Safaricom’s Lipa na M-PESA avenue was more than all the money circulating outside banks.

Financial Sector Deepening Kenya said between July and September, 2020, at least Kes 229 billion was paid to Lipa na M-PESA merchants.

This was more than the total value of currency outside of banks (Kes 218 billion) in September, last year.

This is the equivalent of every shilling, not in a bank, being used to purchase goods or services through a Lipa na M-PESA merchant at least once during that three-month period.

This is the first time this milestone has been reached.

Use of mobile money for transactions shot up last year as customers afraid of coming in contact with contaminated notes and coins shifted to mobile money.

Move by the Central Bank of Kenya to encourage cashless systems by introducing the waiver of fees on transfer of less than Sh1000 and any amount of money from banks to mobile wallets played a big role in fueling this shift.

Businesses also encouraged clients to use mobile money with almost all businesses accepting the virtual currency including mama mboga (grocery dealers), matatu (public transport) and boda-boda.

Read also: M-PESA agents handling more cash than Kenyans

FSD noted that the total value of transactions made to merchants through Lipa na M-PESA increased by over 30 per cent between July and September 2020 compared to the previous quarter.

There was a 29 per cent increase in the number of active Lipa na M-PESA merchants.

A recent study found that 62 per cent of micro and small enterprises accepted mobile money payments in February 2021 compared to 18 per cent of businesses in 2018.

However, only 3 per cent of this growth took place after February 2020, indicating that most micro and small businesses adopting digital payments did so before the pandemic.

During 2020 Safaricom launched two significant products aimed at increasing the ease of registering as a merchant as well as providing value add services.

Pochi La Biashara is a product which allows M-PESA registered customers who own informal businesses such as: food vendors, kiosk owners, boda-boda operators, secondhand clothes dealers among others to receive and separate business funds from personal funds on their M-PESA number.

M-PESA for business app, which allows users to access real time statements, track their business performance, withdraw funds to a non-business M-PESA account, bank account or through an agent and importantly send money to other M-PESA customers to pay for supplies, make payments or pay wages.

It also set up an online portal to allow businesses to apply for a Lipa na M-PESA till without having to visit an office.

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