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In recent years, mobile money services have revolutionized how people in Kenya manage their finances. Mpesa is a widely used mobile money transfer service that people and businesses have come to depend on. This article will delve into all the aspects of running an Mpesa business, the ways of starting it, and the benefits and downsides of running it.

What is an Mpesa business?

An Mpesa business refers to an enterprise that offers a range of services, including deposit, withdrawal, and bill payment to prospective clients. An Mpesa shop acts like a bank by enabling Safaricom customers to withdraw and deposit money into their lines. By establishing and managing an Mpesa shop, you have the opportunity to provide these services and generate income via commission-based compensation. Basically, when you start an Mpesa shop, you’re partnering with Safaricom to provide services to their customers.

Capital needed to start an Mpesa business

The capital required to start a Mpesa business varies depending on several factors, mainly in which category one wants to venture into. An average investment of around Ksh 100,000 to Ksh 500,000 is needed to cover costs such as equipment purchase, shop setup, and float for transactions. The majority of the investment will go into maintaining the float. This will enable you to have enough working capital to cater to customers’ withdrawal requests and facilitate smooth transactions.

How to Start an Mpesa Business

To start an Mpesa shop, you may choose to become an Mpesa agent or a sub-agent.

Requirements for Becoming an Mpesa Agent

  • Must be registered as a limited company
  • Have at least 3 outlets
  • Have a minimum float of about ksh 100,000 in each outlet
  • Employees should be at least KCSE certificate holders.
  • Proof of 6 months trading history
  • Certificate of Incorporation

Mpesa Sub-agent

To become a Mpesa sub-agent, you need to be recruited by a Safaricom Agent. Once compelled, the Agent will provide you with a Mpesa agent number, which you will use to conduct Mpesa transactions. As sub-agent you will only get 80% of the commission while the Agent will receive 20% of the revenue you generate as a sub-agent. The commission is usually deposited directly to your bank account, so the bank till form is required.

Requirements for a Mpesa sub-agent

  • Adhere to the Safaricom guidelines for smooth operation.
  • Purchase Mpesa simcard
  • Maintain a minimum float of ksh 30,000
  • Bank till form

Stand-alone Mpesa Agents

If you are already running an existing business like a hospital, clinic, supermarket, hotel, etc, you might also be able to run an Mpesa within your business premises. However, the required float for running a stand-alone Mpesa agent is a minimum of 200,000.

Advantages of running an Mpesa business

Running a Mpesa business offers the following benefits:

  1. Strong customer demand: A high demand for Mpesa services ensures a constant flow of customers to your shop.
  2. Additional income stream: In addition to the commission acquired from transactions, supplementary earnings may be generated by providing other services, including airtime sales, bill payments, and business bulk payments.
  3. Convenience and accessibility: Mpesa services are quite popular, even in remote parts of the country. Therefore, you will never lack customers who require Mpesa services.
  4. Flexibility: As a Mpesa agent, you have the flexibility to manage your shop’s operating hours according to your own schedule within the designated working hours.

Disadvantages of running an Mpesa business

When running an Mpesa business, the following are some of the advantages you might encounter:

  1. High competition: M-Pesa stores have become quite popular in Kenya, resulting in stiff competition. Differentiating your shop and attracting clients may need extra work.
  2. Security risks: When you have an Mpesa business, you’re susceptible to constant security risks such as theft, robbery with violence, con wo/men, etc. it is therefore advised that you set up your shop in a way that ensures minimal interactions with customers.
  3. Network and system issues: Mpesa transactions may sometimes encounter network or system difficulties, resulting in potential disruptions to company operations and inconveniences for customers.
  4. Regulatory compliance: In the capacity of a Mpesa agent, it is essential to maintain adherence to the rules established by Safaricom and local governing bodies. Neglecting to comply with this requirement may lead to potential sanctions or, in severe cases, the termination of your contractual agreement as an agent.

Frequently Asked Questions about running an Mpesa Business

How are Mpesa agents paid?

M-Pesa agents are paid via commissions for the transactions they assist. The commission rates exhibit variability contingent upon the nature of the transaction and the magnitude of the monetary value involved. Safaricom, the telecommunications company responsible for operating Mpesa, offers a compensation structure to its agents, which delineates the rates applicable to various transaction types. Agents often collect their commissions on a regular basis straight from Safaricom.

How do Mpesa businesses make a profit?

M-Pesa shops generate revenue through the commissions accrued from each transaction. The disbursement of the commission is done monthly by Safaricom. Further, Mpesa shops can provide supplementary services like the sale of airtime, bill payments, and bulk payments. These additional services not only create extra revenue but also contribute to the overall profitability of the business.

Is an Mpesa shop profitable?

The profitability of an Mpesa shop is contingent upon many variables, including but not limited to its location, the level of competition in the vicinity, and the volume of transactions it handles. In regions such as major cities and towns with high populations, establishing an Mpesa shop has the potential to be profitable. Nevertheless, it is important to diligently oversee expenditures, effectively manage the flow of funds, and attract a consistent influx of customers to guarantee financial viability.

Can a Mpesa shop hold one million?

Yes, it is feasible for an Mpesa shop to accommodate a maximum sum of one million Kenyan Shillings (Ksh) inside its float account. The float account facilitates transactions and ensures that the business has sufficient money to fulfil customers’ withdrawal requests. It is important to acknowledge that the precise float limit amount may differ based on Safaricom’s rules.

How does an Mpesa business work?

An Mpesa business operates by offering Mpesa services to Safaricom’s customers. Customers use Mpesa shops to deposit money into their lines and withdraw cash from their accounts. The Mpesa agent uses a mobile phone integrated with Mpesa software to facilitate the processing of transactions. The Agent is responsible for verifying the customer’s identification, inputting the transaction data, and finalizing the transaction digitally. Upon completion of the transaction, the client is sent a confirmation message, and the required monies are electronically sent. The Agent receives a financial remuneration for each transaction facilitated, while the consumer derives advantages from the easy and safe money transfer services offered by Mpesa.

How do you avoid getting conned when running an Mpesa business?

The best way to avoid loss when running an Mpesa business is to set up measures to prevent such theft cases from ever happening. Here are some tips on how to avoid theft or getting conned when running an Mpesa business:

  • It is best to put up metallic grills and windows to ensure that the customer cannot access the money box.
  • Avoid interacting with idlers who come to the Mpesa shop.
  • Keep up with the latest connning games and educate your employees on the same.
  • Use a Fake Money Detector to check customer’s notes during deposit.  

Have any questions/comments about running an Mpesa Business, simply comment below and let’s interact.