The Blockchain could enable more secure and efficient mobile money transactions in KenyaLast week, Safaricom’s chief executive Bob Collymore said the telco company is considering applying blockchain technology to its mobile money transfer platform M-Pesa. This news is exciting because of the vast opportunities it could bring. One of those opportunities is the ability of the blockchain to reduce transaction costs.
Mobile money transfer costs in Kenya are high especially under the recently implemented Finance Bill 2018 where transfer charges were increased from ten percent to twelve percent. Additionally, using M-Pesa to pay for services or transferring money from M-Pesa to another financial services platform such as a bank account or a Sacco account is expensive. Therefore, Kenyans will be curious to find out whether the integration of blockchain technology into M-Pesa will solve their cost issues.
Reducing Transaction Fees with Blockchain Technology
Blockchain projects such as EOS are making efforts to reduce the cost of making transactions. In fact, EOS blockchain guarantees zero-transaction fees by allowing users to own the network as opposed to Ethereum where users rent computing power and end up paying transaction fees.
An article on Bitdegree gives this example:
“If you owned a one percent stake in EOS coins, you would essentially own one percent of the network, meaning you would own one percent of the required computing power to process the transaction. This is what makes transactions free!”
So if Safaricom’s goal entails reducing costs for their M-Pesa customers, then perhaps they could consider building their platform on the EOS blockchain. At the same time, customers would have the opportunity to own a given portion of the M-Pesa network by holding a certain amount of the “M-Pesa Coin.”
Other Customer Expectations
Besides expecting lower transaction costs from the integration of the blockchain into M-Pesa, Kenyans would want to know that if they send money to the wrong mobile number, they can recover their money within minutes or seconds.
Generally, when this happens, the process of recovering the money is long, tedious, and frustrating since it involves calling the recipient, requesting them to return your money, and involving customer care agents who are not always reliable.
https://www.youtube.com/watch?v=_IT0HfVqmHk
Blockchain technology however, could solve this through smart contracts. For instance, a recipient would be required to meet a few conditions such as verifying their identity before receiving any money from a sender. That means that the blockchain would hold the money until both parties have verified their identities and confirmed the transaction. This could be especially important for large transactions.
Blockchain technology could also eliminate M-Pesa’s current money transfer limit of Sh70,000 due to the increased security and trust. This would remove the inconvenience of sending money to the same recipient several times.
In view of Collymore’s revelation, it is the expectation of every Kenyan that if the blockchain is integrated into the M-Pesa platform, it will address the current challenges of cost, security, and money transfer limits. As much as Safaricom might be driven to grow profits by leveraging the blockchain, the telco needs to ensure that the customers will emerge as the biggest winners as a result of such a technology shift.
