Competitive advantage of M-Pesa, is it sustainable?

Abstract

Mobile Money Transfer (MMT) is an innovation to transfer money using the Information and Communications Technology (ICT) infrastructure of the Mobile Network Operators (MNO). Kenya’s largest MNO, Safaricom, launched an MMT, M-PESA, an innovative payment service for the unbanked in March 2007. Within the first month, Safaricom had registered over 20,000 M-PESA customers, well ahead of the targeted business plan. The growth of M-PESA is faster that the growth of formal bank accounts. Despite competition with telcos and banks, Safaricom’s MPESA has accounted for 78.5% of the total number of active mobile money users in the country. There is therefore some form of competitive advantage that M-PESA is leveraging to gain market share. The purpose of this study was to use the Porters Five Forces model to determine the sustainability of M-PESAs competitive advantage. A descriptive survey design was employed to achieve the study’s objectives. Data was collected from 185 of the targeted 240 respondents using questionnaires. It was found that the main sources of competitive advantage for M-PESA as a MMT service are: most of the people that use money transfer services in Kenya are on the M-PESA service, the integration of M-PESA and banks, the minimum adoption barriers and the simple and transparent pricing. Analysis the sources of competitive advantage by using the Porters Five Forces model and regression analysis indicates that M-PESA has a sustainable competitive advantage as a MMT in Kenya. The study recommends that M-PESA looks out for new threats like Mobile Virtual Network Operators (MVNOs) and that future studies to be done with a higher sample size from the various towns in Kenya for a comprehensive generalization of the results.