Co-operative Bank of Kenya introduces free transfers on mobile app to promote mobile money services

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M-Pesa, a mobile phone-based platform for money transfer and financial services, has transformed Kenya into  an innovation and technology hub. Since its launch in 2007, M-Pesa has witnessed impressive growth. In 2013, it has been noted that 43 percent of Kenya’s GDP flowed through M-Pesa, with over .  Traditional banks see M-Pesa as their serious competitor. Banks here are increasingly offering mobile banking services in an attempt to disrupt M-Pesa’s monopoly in mobile money market. To compete in this market, banks are offering various financial services either free or at a cost lower than M-Pesa.

Co-operative Bank of Kenya through its mobile-based banking platform Mcoop Cash provides customers full banking services, right from opening accounts to applying for and repaying loans. To attract consumers to its mobile platform, recently Co-operative Bank of Kenya removed fees charged at Sh35 (approx. US$ 0.35) to move cash from one Mcoop Cash account to the other. The move was attempted to encourage use of mobile as an alternative banking channel and ease price barriers associated with making mobile based money transfers and payments. However, customers will have to continue to pay the charges when making transfers to sacco and other bank accounts from Mcoop Cash.

It is indeed interesting the way market dynamics in mobile payment industry are changing. Intense competition is for sure going to translate into lower margins. It remains to be seen how M-Pesa shapes up its strategy to retain market share.

To know more and gain deeper understanding of mobile payment industry in Kenya, click here.