M-Pesa, a mobile financial service offered by Kenyan telecoms giant Safaricom, is making strides in the remittance market through a partnership with e-commerce giant Amazon.
The service, launched in 2007, has grown to become a major financial service provider in the East African region, with over 50 million monthly active customers as of September 2021.
M-Pesa has a significant presence in Kenya, with over 30 million customers, and also operates in other African countries such as Tanzania, Lesotho, Ghana, Mozambique, Egypt, and the Democratic Republic of Congo. Its customers conduct transactions worth more than $314 billion annually, with M-Pesa responsible for 60% of formal remittances in Kenya and 20% in Tanzania.
M-Pesa's partnership with Amazon is not the first time both companies have been in talks. In 2021, Bloomberg reported that the two were discussing incorporating M-Pesa as a payment option on Amazon. This development is expected to further drive M-Pesa's growth and solidify its position as a leading mobile financial service provider in Africa.
According to World Bank data, the remittance market in low and middle-income countries grew by 5% to reach $626 billion in 2022. M-Pesa, therefore, sees this as an opportunity to diversify its services and grow its market share.
M-Pesa faces competition from established players such as Western Union and MoneyGram, but analysts suggest that a planned separation from parent company Safaricom could attract new investors and increase M-Pesa's valuation. A split would allow for efficient capital allocation and create value for shareholders.