Management of Safaricom M-PESA Service in Kenya - Case Study Example

Safaricom M-PESA service has been in existence in Kenya since the year 2007 when it was launched, it was launched as a mobile money transfer service that would enable its users to transfer money to other subscribers of the network. However, it was advanced to incorporate sending of money to other mobile subscriber networks such as Celtel, which is currently Bharti Airtel Kenya and Telkom Kenya. The M-PESA mobile money service entails services such as depositing and withdrawing of money, transferring of money to other users and non-users, purchasing of airtime, pay bills and transferring of money between the service and a bank account of the user in some specified banks. The other players in the mobile money transfer service is Airtel money from Bharti Airtel Company, YU cash from Essar Telkom and orange money from Telkom Kenya. Currently, Airtel money second largest provider to the M-PESA service with almost similar products, the emphasis of the product is different from the one in the M-PESA in the sense that the service is mainly designed for the urban-class working people since the Airtel network service is available in towns The Essar Telkom YU cash services communication mix is targeted to the low earning citizens as the company targets to endear itself to the citizens through it low cost service. For instance sending money through its YU cash money transfer service is now free to all its users and across all networks in the country. Orange money from Telkom Kenya is targeted to the working class population especially those in formal employment, this service markets itself to its target group as the fast and reliable way of sending and receiving money among the working population to all the major urban centers in the country. There are other small money transfer services such as Mobi pay, Angaza money transfer service that are not attached to any network service provider, however, these companies do not hold a significant portion of the mobile money market. The flow of information and money starts when a customer approaches an agent with the intention of transferring the money. The customer deposits the amount of money that he want to transfer inclusive of the service charges; after he deposits, he gets an sms confirming the transaction, on the other hand, the agent and the headquarter also get confirmation of the transaction. After the money has been deposited in the customer’s MPESA account, the customer then can be able to send money to another number by authorizing the company to deposit the money in the preferred number mobile number. In addition, for payment of bills, the customer sends money to a predetermined business number allocated to various organizations. When a customer sends money, he receives a confirmation message that the message has been sent to the predetermined number and on the other side the person receiving money gets a confirmation message that the transfer has been completed and the money has been credited to their account; the recipient of the money can then withdraw the money. u deposit confirmation Using the mobile money market, the first step in the process is where the customer deposits money in his mobile number account, this stage takes about 2 to 5 minutes before the transaction can be confirmed and the customer can receive a confirmation message in his mobile number, there is usually no service charge for this stage of the transaction. The next stage is where the customer who deposited the money opts to send the money to his or her preferred number, this process takes less than two minutes for the person on the other end to receive the money and the customer to receive a confirmation message that the money has been sent to the correct number. Since the money has moved from one account to another, it can be considered that there has been some form of value addition therefore a service charge will be applicable which will depend on the service provider, as the rates are different. When the person on the other end receives a confirmation message that he his or her account has been credited with a certain amount of money, he can opt to go and withdraw the money from an authorized agent of the service provider whose network was used to send the money. For instance if the customer who sent the money used Safaricom network and agents, then the recipient of the money will have to withdraw the money from an authorized Safaricom agent irrespective of the service provider that he or she uses. This applies to all other service providers where the initial service provider who was used to deposit and send the money must also be used to withdraw the money. The withdrawal process involves the client presenting his identification documents to prove ownership of the mobile number that he is using then goes ahead to withdraw cash using the mobile money application in the SIM card. This process takes 3 to 5 minutes before the transaction can be approved and the customer gets a confirmation message after which he is given the cash by the agent. The value addition in this stage involves withdrawing the money from the customer’s account to give him in liquid form therefore a service charge is applicable which will depend on the mobile network provider that is being used. A point to note is that mobile money transfers across different networks are usually more expensive than transfers within the network. 3a. The M-PESA service comes packaged within the Safaricom SIM card; therefore, any user of Safaricom service has the capability of accessing the service provided he is registered. The M-PESA package comes with very many services that go to emphasize on the convenience and time saving aspect of the service (Omwansa, & Sullivan, 2012, p128) The send money option in the M-PESA menu allows users to send money to other users of the service in addition to Safaricom network subscribers who have not subscribed and users of other networks in the country (Chuhan-Pole & Angwafo, 2011, 89). Receive money option allows the users of the service to receive money from the other users and from a similar service provided by other users (Morawczynski, Smith, & Bray, 2011, 97). In addition, the buy airtime option allows the M-PESA users to top up their mobile phones using money that they have deposited in their M-PESA accounts, this service also allows the user of the service to top up another number within the same network (Gewald, Leliveld & PešA, 2012, p153). The inclusion of M-SHWARI service, which is a mobile money banking service within the M-PESA service, has led to attracting of many customers. This is because the service is like a typical bank where individuals can borrow money depending on their use of other Safaricom network services such as data and calls, in addition people can also save money and earn interest rates on their savings. The M-PESA package also comes with the payment services that include an option for paying a person bills such as electricity bill, water bills, in addition, individuals can also pay for other services including repaying their loans using the payment service (Jerome, 2011, p198). Still in the service, a buy good option helps the individual to purchase goods at the comfort of their homes and pay for them using money that they have deposited in their M-PESA account (Banerjee & Duflo, 2011, p235). Another key feature of the M-PESA package is the personal account where an individual gets the chance to customize his M-PESA accounts including the services that he wants to subscribe to. 3b. volume dimension- the people who use the mobile money transfer market usually require the same type of services which are depositing money, paying bills or transferring the same to other clients. Therefore due to the repetitive nature that are involved in the transactions it is possible to increase the number of transactions while at the same time keeping the operational costs low, however, the transactions are capital intensive since they require a large number of machines to take care of the concurrent customer requests (Urbanek & Průcha, 2009, p61; Doran, D. (2004, p105). Variety dimension- this service is available for a wide variety of transactions and different amounts, for instance purchase of airtime, loan services and transfer of money in all denominations. Due to the variety of services, the cost of operation is likely to be high, as each service will require some unique expertise to handle it (Huan, Sheoran & Wang, 2004, p27). Variation dimension- the level of demand for the MPESA service is not seasonal. Therefore, it is relatively easy to determine the volumes of transactions that are likely to be carried out which makes it easier for planning and allocation of resources. This means that costs can be kept low as demand for the services is constant and therefore optimal utilization of the resources. Visibility dimension- the visibility dimension of the MPESA service, which means the ability of the customers to keep track of the process, is very high as with every transaction, the customer gets a notification message up until the receiver on the other end gets the money; this has greatly improved the customer experience (Slack, Chambers & Johnston, 2010, 89). For the MPESA mobile money service, the order qualifying factors include it ability to send and receive money with minimal losses, its ease of use from ones mobile phone and the accessibility of MPESA agent to deposit and withdraw cash (Lee, Hu, Yen & Tsai, 2008, p34). The order winning factors for the service include its affordability compared to other money transfer services and the speed with which the transactions are carried out (Wouters, 2004, p586). One of the wastes that can be traced in the system includes fraud; this is where the customers lose money to fraudsters who pose as either Safaricom customer care representatives or MPESA users. This has led to customers losing faith in the service, which poses a threat to the volume of transactions. In order to eradicate this waste, several alternatives can be considered; one is in cases where an individual receives some fraudulent messages, he or she should call customer care to confirm whether the text is agent, secondly is confirming keenly whether the text messages are from MPESA, being aware of one’s account balance and keeping one’s PIN safe. Another waste facing MPESA service is network connectivity in the remote areas where network is unavailable; this has seriously affected the service whose demand has outstripped its supply. The solution to this problem lies with the customer who should report areas with network coverage to the Safaricom customer care for the engineering department to address it, on the other hand, Safaricom should continue to upgrade its system to ensure that all areas have network coverage and collaborating with service providers to ensure the service is accessible even to people outside the country. The MPESA service has not captured special need of special populations such as the visually impaired, illiterate and the aged, which is a significant population especially in Africa. In order to deal with this, Safaricom Company should find mechanisms to include this population such as introducing a voice option, which will guide those who cannot be able to read and write. As an operations manager, some things would be done differently to improve the operation of the service. One of the things that would be done differently is the elimination of agents and replacing with the token, which would be sold in stores and shops like the usual credit cards, this would reduce the payments that are made to agents in terms of commission. On the other side, recipient will receive a confirmation message informing him of the transaction, he will then be able to use the money to for various purposes by transferring it to other numbers. This will also avoid overworking of the servers hence better service. References Banerjee, A., & Duflo, E. (2011). Poor Economics a Radical Rethinking of the Way to Fight Global Poverty. New York, PublicAffairs. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=688714 Chuhan-Pole, P., & Angwafo, M. (2011). Yes Africa can: success stories from a dynamic continent. Washington, D.C., World Bank. Doran, D. (2004). 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Examining the adoption, usage and outcomes of mobile money services: the case of M-PESA in Kenya. Thesis (Ph.D.)--University of Edinburgh, 2011. http://hdl.handle.net/1842/5558. Omwansa, T. K., & Sullivan, N. P. (2012). Money, real quick the story of M-PESA. [London], Guardian Books. Slack, N., Chambers, S., & Johnston, R. (2010). Operations management. Pearson Education. Urbanek, J. F., & Průcha, J. (2009, February). A development of wireless interoper-mobile application for outdoor operation management. In Proceedings of the 8th WSEAS international conference on Electronics, hardware, wireless and optical communication (pp. 57-64). World Scientific and Engineering Academy and Society (WSEAS). Wouters, J. P. (2004). Customer service strategy options: A multiple case study in a B2B setting. Industrial Marketing Management, 33(7), 583-592. Read More