Safaricom’s has reported its first-ever decline in M-Pesa agents, with over 8,300 agents shutting down operations in the year leading to March 2024. The drop comes in the wake of the company’s new geo-locking policy, designed to combat fraud but meeting resistance from its agent network.
Business Daily reports that the geo-locking system, which restricts M-Pesa tills to specific geographical locations, automatically deactivates terminals if operators attempt to relocate. This measure has reduced the agent network from 270,360 to 262,016, marking a 3% decline.
While the drop in agent numbers presents operational challenges, Safaricom maintains that the trade-off has been worthwhile. The company reports that the geo-locking system has “effectively curtailed fraud” and enhanced regulatory compliance. Notably, cases of asset misappropriation, including till theft, have dropped to zero.
However, the number of investigated fraud cases has more than tripled from 33 to 103, though this increase partly reflects the inclusion of Safaricom’s Ethiopian operations. Most current fraud investigations center on policy breaches and unauthorized access by staff rather than till-related crimes.
The impact on Kenya’s broader mobile money ecosystem has been minimal. The total decline in mobile money agents across all providers was just 873, suggesting that many former M-Pesa agents have switched to competing platforms like Airtel Money and T-Kash. This migration implies that while agents are leaving M-Pesa, they’re not abandoning the mobile money sector entirely.
Still, the reduced agent network could affect service accessibility, particularly in areas where M-Pesa agents were already scarce. However, Safaricom argues that the geo-locking system has helped identify underserved areas, potentially guiding future network expansion.
Nonetheless, while M-Pesa’s agent numbers have declined, the industry’s core metrics remain strong. Mobile money subscriptions, transaction volumes, and total transaction values continue to grow, proving the sector’s resilience despite operational changes at its largest player.
The question now is whether other mobile money providers will adopt similar security measures, potentially changing the entire industry’s approach to fraud prevention.
Editor’s Note: The new geo-locking system automatically deactivates M-Pesa tills when agents attempt to conduct transactions outside their designated geographical boundaries. This directly targets a common fraud scheme where agents register tills in one location but operate them elsewhere, often to facilitate unauthorized or fraudulent transactions.
