M-Pesa is looking at the trillion dollar global remittance market

With global remittances set to reach $5.4 trillion by 2030, according to a specialized UN agency, African fintech darling M-Pesa wants to grab a piece of the pie. The Kenyan fintech behemoth is stepping up an ambitious expansion campaign to find markets in the global north.

According to the UN’s specialized agency, the International Fund for Agricultural Development (IFAD), in the 2021/22 forecast period, remittances (605 billion dollars) was more than three times the total amount of official international aid (178.6 billion dollars).

With forecasts showing that global remittance markets will cross the trillion dollar mark as soon as next year, players in this space are now eager to block their piece of the pie.

Amazon and M-Pesa

According to Aly-Khan Satchu, economist and managing director of investment advisory firm Rich Management Ltd, M-Pesa is effectively the targetin a two-way flow with a recently announced partnership with Amazon.

“In terms of inbound transfers, I think M-Pesa needs to look at fees if it is to take significant market share and a more sophisticated domestic platform that provides a range of investment opportunities for inbound transfers. Safaricom has the platform and the point-to-point advantage and the scale to make all of this come together,” he said.

The move to new markets is natural and necessary progression for M-Pesa, which has already established a strong track record of innovation and growth in Africa.

M-Pesa and financial inclusion

The platform has made financial services available to millions of people who previously lacked access to traditional banking services and has changed the way people in Africa manage their money.

Internationally, however, it will first have to be fought against the lucrative market dominated by traditional players such as Western Union and MoneyGram and banks in new countries.

Already, the virtual banking system operated by telecommunications giant Safaricom has limited partnerships with Western Union, Money Gram, World Remit and Remitly, the mobile-first provider of money transfers and financial services for immigrants.

Split from Safaricom

There are now plans for M-Pesa to split from Safaricom, its giant telecommunications babysitter, so that it can be run as a standalone financial service.

“I believe that the overall Safaricom share price is now a drag on M-Pesa’s valuation and that a spin-off will create shareholder value, attract a new class of international shareholders and allow for efficient capital allocation to M-Pesa, Satchu said.

A divorce from Safaricom will give M-Pesa more headroom to pursue international ambitions as a fintech service and could allow it to list on new stock markets, expand its fintech service offering globally and strengthen its position as a leading player in the fast-growing international money. the transfer market.

A strategy for global expansion could be centered around partnerships with local banks and mobile operators, which would help offer the platform in new markets.

Global partnerships

In early February, Nala, a Tanzanian fintech startup, and M-Pesa entered into an agreement to expand their international money transfer (IMT) services to the European Union (EU).

Last year, Safaricom and Visa launched the virtual M-Pesa GlobalPay card, enabling customers to use M-Pesa to shop at more than 100 million merchants in 200 countries for the first time.

At the same time, M-Pesa wants to be the preferred platform for Africans in the diaspora, and send billions home. Last year, Africans living abroad sent 54 billion dollars at home.

This approach will allow the service to build on its existing expertise and relationships while leveraging the knowledge and resources of local partners to ensure a smooth rollout.

However, the European market represents a completely different challenge. With highly developed financial systems and strict regulations, M-Pesa will need to invest heavily in research, development and marketing to win over customers and convince regulators of the value of its services.

Adaptation to global markets

One of the keys to M-Pesa’s success will be its ability to adapt to the unique needs and demands of each market.

For example, in Europe, where many countries have well-established banking systems and high levels of financial literacy, M-Pesa will need to emphasize the convenience, security and speed of its services.

In addition, the company will have to comply with complex regulations, data protection laws and anti-money laundering requirements to operate in the region.

Another critical factor in M-Pesa’s expansion into Europe will be its ability to build strong partnerships with local banks and stakeholders.

This will help the company gain a better understanding of local markets, overcome any regulatory hurdles and build a network of trusted and loyal customers.

Despite these challenges, M-Pesa’s potential to revolutionize European financial services could be enormous, especially payment services.

M-Pesa can ride on the confidence of Vodafone and Vodacom, Safaricom’s global shareholders to penetrate recalcitrant European markets. But it will face backlash from the banks.

With its innovative technology, extensive network and proven track record of success, the company is poised to make a big impact in the region and change the way people think about money and financial services.

One way M-Pesa can also drive its expansion into new markets is by doubling its listing on international exchanges.

Going public allows the company to raise capital and gain access to new investment opportunities, which can help it grow its business and expand into new markets.

In addition, listing on a major stock exchange could increase M-Pesa’s visibility and credibility, making it easier for the company to attract new customers and build its brand.

Overall, an expansion of M-Pesa to new markets could be a game-changer for the company and the financial industry as a whole.

By leveraging its partnerships with international money transfer services and potentially listing on international exchanges, M-Pesa can reach new heights and revolutionize financial services worldwide.

The original version of this article was published by bird Africa without filter.