After much deliberation the Communications Authority of Kenya (CAK) gave the lender, which is Kenya’s largest financial institution by customer base, the green light to roll out its SIM card technology in order to roll out its Mobile Virtual Network Operator (MVNO) services.
This is despite, the country’s largest telecommunication network, Safaricom, arguing that the SIM card poses countless security threats and should be subjected to independent audits.
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“It is a positive instrument to the bank and the fact that it is taking competition to Safaricom’s M-PESA [a mobile-phone based money transfer and micro financing service]. We know with the launch of the MVNO what that means is reduced transaction costs and if that is going to happen then at the same time we do expect M-PESA charges to come down as well,” Eric Munywoki, research analyst at Old Mutual securities told CNBC Africa.
Equity Bank has partnered with the country’s second largest telecommunication company, Bharti Airtel. The partnership will reduce Equity’s cost of delivering MVNO services and this benefit will be passed on to customers.
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Munywoki added that there were many benefits for customers, “The transactions they do have a cap of about 25 Kenya shillings [which is cheaper] compared to M-PESA which you can even spend 200 Kenya shillings to transfer money. I do believe it is a good thing and the uptake of this service is likely to be very high.”
The entry of the bank with over eight million customers into the MVNO market is seen as a possibility to finally bring in a force that could dilute the dominance seen in the past years in mobile money market share that is dominated by Safaricom’s M-PESA.
“What we have seen with Safaricom is that they have noted some of the security issues and in one year that this bank [Equity] has been given to try this system will tell how it is going to play along and run,” Munywoki said.
“The MVNO rollout using the thin SIM which is set for this month has been tested by the Global Systems Mobile Association which indicated the pros and cons of using the card."