With New Deal, Western Union And M-PESA Make Global P2P Wave

Western Union and M-PESA announce today a global P2P partnership that will make it easier for M-PESA customers to send money outside of Kenya and for this highly popular mobile payments platform to scale globally.

The decade-plus story of Kenya’s M-PESA stands as a successful tale of mobile payments, financial inclusion and digital financial services for the millions of Kenyans who were otherwise denied access to traditional financial services. Over that decade, M-PESA has grown to more than 28 million active customers who drive the equivalent of 50 percent of Kenya’s GDP — some 1.7 billion transactions annually — across its mobile financial services network. Over the years, M-PESA has evolved its ecosystem to give its customers access to micro loans, healthcare and other payments and banking-related services.

With the announcement today of its partnership with Western Union, M-PESA customers will now be able to send money from their M-PESA mobile wallets to anyone living in any one of the 200 countries in which Western Union operates. This newly established global P2P capability means that consumers with M-PESA mobile accounts no longer have to travel long distances to bank branches to initiate those transfers, saving them both time and money.

The deal, officially announced today (Nov. 7), comes amid “big demand from our customers to interact with the world,” said Sitoyo Lopokoiyit, chief financial services officer at Safaricom, the M-PESA operator, said in a pre-launch interview with Karen Webster. He was joined by Odilon Almeida, president, Western Union Global Money Transfer, as the two of them discussed the impact of this partnership on M-PESA customers and the global, mobile P2P platform.

The M-PESA deal is the second example in as many weeks of Western Union’s decision to open its global payments network to third parties. Consumers who use the service will see it branded as an M-PESA service — Western Union is the white-label provider of this money movement service to Safaricom. Last week, Western Union announced a deal with Amazon that will allow Amazon customers to pay in local currency at Western Union agent locations for items they buy online.

Almeida said that both Amazon and M-PESA are examples of “selective offers with very special players around the globe” driven by — first and foremost — what’s best for the customer. The M-PESA and the Amazon deals, he said, are intended to spur cross-border transactions by allowing each to enter new markets more quickly and to operate in those markets at scale with relevant consumer-driven services that ride Western Union’s regulated, complaint payments rails.

Key to both of these partnerships is the access to the cash network that Western Union’s 500,000 agent network offers — and the optionality that access to cash brings to consumers. Although M-PESA money transfers are initiated via the mobile device, recipients can pick up their funds digitally, have them directed to one of the billions of bank accounts that Western Union is already connected to or receive them in cash at an agent location.

That consumer choice is important, Almeida said, since operating a global P2P network is only as successful as its ability to support the variety of payments cultures and preferences of its global citizens.

For all the talk and action around eCommerce and digital payments, he said it pays to remember that cash — the need for cash, and the movement of cash — remains a relevant payments method in many parts of the world.

Enabling only digital funds receipt, he said, eliminates a large portion of the world that prefers cash — and an important onramp to digital for those consumers.

Access to cash, along with the digital and the billions of bank account end points enabled by Western Union, Lopokoiyit said, was a core motivation of the partnership.

“Every time I hear someone say that cash is not important, that usually comes from someone who does not have cash on them,” Almeida said. “Cash is important around the globe.”

Western Union and M-PESA started a long history of working together in 2011 when they announced a deal in which M-PESA customers could then receive Western Union money transfers.

The idea for running those rails in reverse — moving money from M-PESA outside of Kenya — has been a topic of conversation ever since, and one made much easier with the evolution of technology, Almeida said. Even five years ago, Lopokoiyit said, such a deal would have been difficult for Western Union given the lack of access to the APIs that make integrations seamless and secure. The integrations that make this new service possible, he said, were relatively simple.

Almeida said that opening Western Union’s network for M-PESA reflects a commitment to putting the consumer first, and the partnership with M-PESA is an opportunity to open the world for its customers.

M-PESA, he said, is a recognized pioneer in using mobile devices to give Kenyans access to financial services that improve their financial well-being and improve their quality of life. Western Union, he added, is a recognized pioneer in giving consumers access to funds anywhere in the world — that gives those living everywhere the same access and opportunity. It seems only fitting, Almeida remarked, that these two pioneers come together to innovate how money moves between people anywhere in the world.