Can Paypal battle M- Pesa for a spot on Kenya’s online mobile payment space?

Paypal recently announced plans to enter Kenya’s market. The American online payment system, which is currently operational in Nigeria, Cameroon, Ivory Coast, Egypt and Zimbabwe, plans to continue its expansion within Africa’s online mobile payment space.

African countries like Angola, Burkina Faso, Algeria, Tunisia and Benin Republic amongst others have been using the Paypal service for over eight years. Nigeria was the most recent African country to join the list in 2014.

M-Pesa, a leading mobile phone money transfer and micro finance service has been serving to the mobile transaction needs of Kenyans for eight years. The mobile service which is offered by Safaricom, one of Kenya’s largest mobile network operators, provides services to 15 million users who conduct up to 2 million transactions daily. However, a new phase of competition is set to begin with the imminent arrival of Paypal.

Paypal has a wide global reach supporting services from more than 190 countries. The company had been hesitant about mobile online transactions in some African countries because of the prevalence of fraud, but has recently begun an aggressive expansion across the continent.

While M-Pesa might not have the financial standing and global reach of Paypal, it has been the major mobile transaction service provider in Kenya. After eight years of existence in Kenya M-Pesa has become a household name, and this might help it hold on as Kenya’s first choice for online mobile transactions. Additionally, M-Pesa offers online deposit and withdrawal payment services, enabling bill payment and business transactions. On the other hand, Paypal offers limited services in the African countries where it operates. For instance, Paypal customers in Nigeria can only send money but cannot receive payments. This might hurt Paypal’s chances of reducing M-Pesa’s market share in Kenya

With lots of cash and a global reach, Paypal’s entry into Kenya’s online mobile space might give M-Pesa and other local online network operators a run for their money.

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