Alibaba allows Safaricom’s M-Pesa to be used for ecommerce payments

Mobile payments may not have delivered MNOs in developed economies the new revenues they had hoped for when contactless NFC technology was first incorporated into handsets.

The leading role in that value chain quickly passed to Apple and Google, but in emerging economies, simpler payments systems, often based on SMS, have been a significant boost to MNO businesses, as the success of M-Pesa in Kenya has demonstrated. And some of the new MNOs, such as Reliance Jio and Japan’s Rakuten, have put payments at the heart of their mobile digital services platform (the latter helped by its existing core business in online shopping and finance).

Now the two trends are colliding in a deal between Safaricom, the biggest operator of M-Pesa, and cloud/ecommerce giant Alibaba of China. Safaricom, a subsidiary of Vodafone, has signed a deal that allows M-Pesa to be used to make purchases on Alibaba’s platforms, and this could help to extend the MNO’s most profitable service internationally., Alibaba’s ecommerce site, will allow Kenyan consumers to pay for goods without a payment card, using M-Pesa on their handset instead, within weeks. Ant Financial, an affiliate of Alibaba, will offer M-Pesa as one of the payment options with transactions denominated in Kenyan shillings.

This is the latest extension of services under the M-Pesa brand – it started supporting simple SMS-based cash transfers for the unbanked, a facility which proved wildly popular and was introduced in some other countries including Uganda and India. Now it also offers other payment services, plus loans and savings accounts, to more than 21m users in Kenya alone.

“As our customers get more digital, they want to shop in a more digital kind of a format, that’s why we are seeing ecommerce growing,” said Safaricom’s chief customer officer, Sylvia Mulinge. “The move especially targets micro-traders in [Kenya] who source goods and other supplies from manufacturers in China.”

Kenya’s largest operator said the deal was part of an effort to transform M-Pesa into a global payments platform. In November the MNO agreed a deal with Western Union to allow M-Pesa users to send money around the world using their phones.