One of Africa’s most popular fintech companies, M-Pesa, is eyeing the global remittance market. And data shows it might not be the wrong target. Forecasts from the United Nations predict a $5.4 trillion industry by 2030, and companies want a slice of this cake.
The UN’s International Fund for Agricultural Development (IFAD) reports that in the 2021/22 forecast period, remittance flow totalled $605 billion. This amount is more than triple that of official international development assistance, which was $178.6 billion. The report also projects that the global money transfer markets will cross the trillion-dollar mark as soon as next year. So it’s no surprise that several companies, including M-Pesa, are jumping on the train.
M-Pesa, a virtual banking system operated by Kenyan telecommunications giant Safaricom, has made financial services accessible to millions of people in Africa. It also championed Kenya’s rise to becoming one of the world’s leading mobile money markets. Now, the company aims to expand into international markets, where it will face established players such as Western Union and MoneyGram, as well as banks in new countries.
To capture a significant market share, M-Pesa aims to reduce charges and offer a suite of investment opportunities. The company recently partnered with Amazon, targeting a two-way flow for inward remittances. Aly-Khan Satchu, CEO of the investment advisory firm Rich Management Ltd, believes that Safaricom’s platform and point-to-point advantage, along with the scale of the company, will help M-Pesa succeed.
Plans are underway for M-Pesa to split from Safaricom, allowing it to run as a standalone financial service. This move 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 solidify its position as a leading player in the rapidly growing international money transfer market.
However, the European market presents a different challenge with highly developed financial systems and stringent regulations that M-Pesa needs to navigate to win over customers and regulators.
To succeed globally, M-Pesa must adapt to the unique needs and requirements of each market. In Europe, where many countries have well-established banking systems and high levels of financial literacy, M-Pesa must emphasize the convenience, security, and speed of its services. The company must also comply with complex regulations, data protection laws, and anti-money laundering requirements to operate in the region. Building strong partnerships with local banks and stakeholders will be critical to M-Pesa’s success in expanding into new markets, helping the company gain a better understanding of local markets, overcome regulatory hurdles, and build a network of trusted and loyal customers.
One way that M-Pesa could drive its expansion into new markets is by double-listing on international stock exchanges. Going public could help the company raise capital, access new investment opportunities, and grow its operations. Listing on a major stock exchange could also increase M-Pesa’s visibility and credibility, making it easier for the company to attract new customers and build its brand.
Despite the challenges, M-Pesa’s potential to revolutionize financial services in Europe and other global markets is immense, especially in the payments sector. With its innovative technology, extensive network, and proven track record of success, M-Pesa is poised to make a big impact in the region and change how people think about money and financial services. Through strategic partnerships, innovative solutions, and a willingness to adapt to the unique needs of each market, M-Pesa can drive its expansion into new markets and become a game-changer for the financial services industry as a whole.