M-PESA the Safaricom mobile money platform is five years old this year (2012).
It provides a mobile e-wallet that is loaded with electronic money called Mpesa.
Primarily Mpesa is bought at an M-PESA Agent outlet, where cash money is exchanged for Mpesa money.
The spectacular success of Safaricom M-PESA offering, driven by a captive (“peculiar”) mobile service customer base, the roll out and management of M-PESA agents outlet coupled with a gamble in terms of strategy that was singularly executed, has given rise to a service that is the envy of many and the fear of even more.
Success begets more success, leading to everyone wanting to jump into the M-PESA agents bandwagon, which in itself is expected and acceptable, the only downside being how to manage and ensure the good name of the service is maintained.
The M-PESA agents ecosystem can be a quagmire to unravel for the uninitiated, and that is what this particular blog is all about.
M-PESA Agents Classification.
Safaricom currently uses the following classification terminologies to classify agents:
Super Agents, Agents, Sub-Agents.
I use a similar pyramidal classification; Tier-1 Agents, Tier-2 and Tier-3 Agents, based on amount of Mpesa e-float likely to be found in these establishments
Tier 1 Agents
More than KES 500,000
Tier 2 Agents
Between 50,000 and 500,000
Tier 3 Agents
In the Beginning
There was Safaricom, then M-PESA, one bank as a Super Agent (Commercial Bank of Africa) and Agents.
In those days and even today to be an Mpesa Agent was based on the following requirements:
- Mimimum 3 outlets ready to do M-pesa Business
- 6 Months trading hoistory
- Appropriate locations
- Minimum KES 100,000 for e-float per outlet
- Minimum KES 100,000 for Simex (Sim replacement cards)
- Minimum KES Cash for liquid cash float per out let
- Staff requirements, education levels and numbers
- Technical Requirement, computers, internet connection, ETR machine, official email contact, etec
- Premises and Maintenance, no semi-permanent outlets
- Mandatory documents, the lists is 14 points long.
See the complete lists of requirements here:
A Bright Brave Soul
With those kind of requirements to roll out M-PESA Agents would have been painfully slow and with competitors coming up with better modern platforms offering equivalent services it was imperative to rethink the situation on the part of Safaricom.
Thus a bright brave soul come up with the aggregator model and a stroke of genius it was!
With this model, M-PESA Agents could drive the Agents outlets recruitment by shielding would be Agents from the rigors of strenuous requirements.
Hence existing Mpesa Agents at that point in time and later could apply to be Mpesa Agents Aggregators and if allowed would sign an agreement on the same with Safaricom Limited.
The new agents recruited through the aggregator model are called sub-agents in Safaricom classification lingua.
With this new model M-PESA Agents roll-out grew wings, and took off like a bush fire, more spectacular than the wildebeest migration in the Maasai Mara.
Alas, but the road has not been without pain and suffering on the part of would be Agents and Safaricom Mpesa employees alike, for greed joined hands with bureaucracy and created a horror.
You can feel the pain and frustration of this Mpesa Agent here?:
The Safaricom M-PESA Aggregator Model
The M-PESA Aggregator looks for and recruits M-PESA sub-agents, and this is by whatever suitable means at their disposal, a point some clique in Safaricom seem to be contenting.
Now the model works as follows:
- The Sub-agent is aggregated, that is they are registered directly with Safaricom.
- The Sub-agent gets a till (account) to carry out Mpesa transactions on.
- The Sub-agent gets a store management till, which he uses to get extra float from a Super Agent bank and his trading commissions are deposited there directly by Safaricom.
- Sub-agents are supposed to maintain a minimum float of KES 30,000.
- The Sub-agent keeps 80% of his trading commissions and the Aggregator gets his 20% also directly from Safaricom, the 80/20 rule.
- The Sub-agents outlet is named as Aggregator/Sub-agent.
- The Sub-Agent signs an Mpesa Aggregator/Agent agreement modeled along Safaricom sample agreement, find a copy here; https://dl.dropbox.com/u/55655136/Sample%20Mpesa%20Aggregator%20-%20%20Agent%20Agreement.pdf
- The Aggregator ensures all that is enumerated above is implemented at no extra cost to or goodwill payment by the Sub-agent.
As can be seen, or deemed, it is a beautiful model, the Sub-agent keeps and manages his float, the Aggregator gets compensated for his efforts and everything runs smoothly, or so it is supposed to.
The Ugly, The Bad and The Good
The model was and still is beautiful, but with a few circumventions here and there by the Aggregators coupled with major laxity and complacency on the part of model enforcers in Safaricom a new KES 400 Million per year cartel come into being.
1. The New Sub-agents Are Not Aggregated.
- The Aggregators treats the new Sub-agents as their own outlet, thereby managing the sub-agent float.
- The Aggregators calculate the trading commissions for the Sub-agents, since all the commissions come to them.
- The 80/20 rule is changed to 70/30 or 75/25 to come down to 80/20 only by proven performance on the part of the Sub-agent.
- Sub-agent starting float is set at KES 100,000 or more.
- The Sub-agent has no control of the amount of float in the till in their outlets, the till is not theirs
- The kind of agreement signed, would make Safaricom scream.
- Safaricom does know the Sub-agent
- If an aggregator business is closed also the Sub-agents float money is also closed in.
- Aggregators charge goodwill, say KES 30-50,000 or more.
Would be Sub-agents are often in a very week negotiating position when faced with variations of the above and a hammer from the following.
2. Safaricom Mpesa Field Officers
The aggregators can only carry out the above injustices in cohorts with Safaricom personnel.
The field officers are supposed to ensure adherence of set service standards like;
- Outlet location to safeguard revenue erosion of existing Agents.
- Ensure outlets are carrying out KYC (Know Your Customer) and AML (Anti Money Laundering) procedures, like requesting an ID or deciding you look suspicious and should not be depositing or receiving say KES 20,000.
- Ensure proper outlet branding and much more.
It will be noticed that the first two duties are noble, but misplaced.
The first one encourages and abates the Aggregator greedy practices, since to get an outlet next to an existing Mpesa outlet, which is the most natural and sensible thing to do, someone has to say yes or no, hence the would be sub-agent must part with
The second is easily circumvented via an ATM withdrawal, ATM’s don’t ask for ID’s and another factor, out of the more than 16 Million registered Mpesa users, less than one million have ever used an ATM withdrawal. The point here is that the ID can deter petty crimes but not money laundering.
What Should Have Been or Can Be
How Do You Audit 20,000, 40,000, 70,000 Mpesa Outlet?
That can be the first step Safaricom has to figure out, do it passionlessly and severe any miscreant Aggregators, but ensure the Sub-agents continue.
My two cents worth on this, get an outside firm to do it, do it very very fast, say give it to PCK for example, or a governmental ministry department, they have the numbers to carry it out (95%) in a day or two.
Let Outlet Crop Up Where They Wish
Business is business is business period
Safaricom is no longer in the business of ensuring agents and sub-agents revenue, the agency network has reached a stage where it has grown its own legs, let it be, apart for the bit about none competing services.
Let Kenyan set up outlets where they wish and run then how they deem fit, say under a tree, in a matatu, in a club, 247, etcetera, etcetera, let them play with it.
Should even set a standard for an Mpesa outlet within 400 meters of 95% of the population.
Automate Automate Automate
A lot of the crimes and frauds that can be put in place within a mobile money offering real time analytics and innovative service increments can detect and stop on a real-time basis.
Mpesa Aggregators Model
There seems to be luck of information at the market place about this model and how it works.
This can squarely be remedied by encouraging competition among aggregators and banishing any notions within Safaricom ranks that aggregators are not supposed to advertise, solicit or entice would be Sub-agents to join their networks.
In other words aggregators should be able to build brands within the M-PESA brand, for example, xxxx the Mpesa outlets that never run out of float, or YYY get Mpesa service with a smile, …….
Mpesa Agency Business
It is a beautiful business, a fantastic “mpango wa kando”, with so many other opportunities happening (banking agencies) and waiting to happen around it (micro finance outlets).
Are you an Mpesa Agent or Sub-agent (whatever you call yourself) or do you want to become one.
If you leave this blog with anything at all, let it be this;
How do you know you are aggregated?
You have two Mpesa tills;
One with the agents number, for customer transactions.
Another with the store number, store management till, this manages your float store