BY DAVID WANJALA & ANTONY MUTUNGA
There has been an increase in formal financial inclusion from 26.3% in 2006 to 82.9% in 2019 in Kenya as a result of the introduction of mobile money, according to the 2019 FinAccess report.
With this expansion of mobile money, other innovations would come up to aid and compliment it. Among them were Safaricom’s Lipa na M-pesa’s PayBill and Buy goods services.
The first to be introduced to the market was Pay Bill, which was one of the additional services to be incorporated in M-Pesa. This additional service was a customer-to-business payment system.
Through Pay Bill, organizations now had the option of opening up an M-Pesa account and using it to collect money from their customers. In order for an organization to have a Pay Bill, Safaricom requires a duly filled and signed application form, a signed tariff guide, Kenya Revenue Authority (K.R.A) details, a copy of document confirming the legality of the business, the business bank details and a copy of identification from the directors of the business.
With the information sent to Safaricom, it will evaluate and provide you with a Pay Bill number. Whenever you want to make a withdrawal, one has to communicate with the dominant network operator. PayBill is basically where the customer has an official relationship with the organization to whom they are making a payment and have an “account number” that helps identify users. For instance, Barclays Bank has got a Pay Bill number, 303030, to allow one to deposit money and pay bills from ones M-Pesa to their account.
Pay Bill is often preferred for remote payments such as utility bills and loan repayments. Funds received via Pay Bill can only be withdrawn to a bank account. Businesses are required to have a minimum of at least Sh50, 000 in their Pay Bill account before they can transfer funds to their bank account. Pay Bill numbers have multiple tariffs, which businesses can choose from depending on whether they wish to absorb the transaction fee, share the transaction fee with the customers, or pass the entire transaction fee on to their customers.
On the other hand, Lipa na M-Pesa’s Buy Goods and Services application was introduced in 2010. The feature is a point of sale application (POS), which enables users to make payments from their M-Pesa accounts at till points. It majorly involves supermarkets, fuel services stations, chemists, hardwares, and other retailers who have unique till numbers.
In order for an organization to get a till number from Safaricom, they have to provide an appropriately filled and marked application form, as well as terms and conditions from the operator, K.R.A details, identification of the business or individual and an M-Pesa registered line for the case of an individual who needs the till number.
The Till Number was meant for immediate purchase of goods and services, for the walk-in customers paying for goods and services over the counter where payments are immediately confirmed.
To withdraw from the Till Number, owner of business has to go to their nominated Safaricom number and dial *234#, under the options, one has to choose merchant services and input their store number so as to withdraw their money to their nominated number. It is important for users to differentiate between the till number and the store number.
Of late, however, businesses have preferred Pay Bill as compared to Buy Goods and Services till number. This not only occurs with new businesses but also existing ones are turning away from Safaricom’s Till Number in favour of Pay Bill. This is accredited to the fact that those using Pay Bill have multiple tariffs, which businesses can choose from depending on whether they wish to absorb the transaction fee, share it with the customers, or pass the entire transaction fee on to their customers. Most of the time, organizations pass the entire burden to the customer and in some instances both parties share the burden.
The case is different when it comes to Buy Goods and Services; in this case, the burden is largely shouldered by the business.
With most businesses moving from the Till Number to Pay Bill where customers are left to shoulder all the transaction costs, it might as well be the end of Safaricom’s Buy Goods and Services.
One of the most prominent rules as far as the ledger is concerned is that you must do whatever it takes, legally, to reduce the cost and increase the profit. With the option to prefer the Pay Bill as opposed to Till Number by businesses remaining open and legal, a death knell for the latter has been officially sounded.
When Safaricom rolled out the Till Number services, the purpose was to get cash from the shoppers’ wallets for a safe and secure shopping experience. The giant telco went out of its way to popularise the service with huge marketing and advertising budgets. For a period of almost a year, for instance, shoppers were rewarded with airtime for purchasing fuel with Buy Goods and Services for Sh500 and above. Besides, several promotional events were also carried out in which Buy Goods and Services users won residential houses worth millions of shillings.
The message was finally hammered home. Up until late last year, one could actually expend almost his entire shopping budget without ever handling cash. You could do your monthly shopping from your local supermarket and pay with Mpesa’s Buy Goods and Services. The local butchery, the diapers’ shop and the eatery at the work place all embraced the paperless service. Muggings went down as wallets were only reduced to business card holders and carriers of passport size photos of loved ones.
Why would Safaricom invest the billions it deed in rolling out the Till Number services only to allow another of its on service to prey on it. If you bought a couple of bottles of Dasani water at a cost of say sh160, you would incur a transaction cost of Sh22 if you paid via Pay Bill, inflating the cost of your purchase to at least Sh182. It would cost you lest than Sh1 in transfer costs if you paid via Till Number. This explains why the fire of the Till Number was beginning to catch up with Kenyans. It is for the same reasons that the same is now flickering, with businesses, naturally out to minimise expenses, moving to Pay Bill and shunning the Buy Goods and Services option.
Pay Bill is now preying on the Till Number. It is incumbent upon Safaricom to declare as illegal the use of Pay Bill where it is obvious that it is the preserve of Till Number. Differentiating the two does not need rocket science. It is the domain of the Till Number where you walk in and pay for goods and services over the counter and the payment is immediately confirmed, and where, as a customer, you do not have an official relationship with the organisation to whom you are making the payment as to have an account number with them that helps to identify you.
It is fraudulent where a Pay Bill is used by businesses instead of a Till Number especially when the former costs more to the customer and Safaricom has to rein in and nip this unfolding trend in the bud. Failure on the part of the service provider could easily result in the demise of the latter, as it negates the purpose for which it was established.