Safaricom’s M-Pesa mobile money service continues to impact lives in Kenya in great ways since its launch more than twelve years ago. In a country where bank penetration was low and the available methods of money transfer were slow and inefficient, M-PESA completely changed the landscape and today, money transfer in Kenya is as simple as sending an SMS.

This has also impacted businesses in the field of e-commerce, banking and even money lending.

M-Pesa growth challenges

However, it has not always been all fun and growth for M-Pesa.

One of the challenges that M-PESA has faced is socially engineered frauds that target M-PESA users. Being a world leader and pioneer in mobile money, Safaricom likely did not have many case studies to learn from.

For a long time, they played catch up games with fraudsters, continually improving their service offering to guard against most of the socially engineered frauds.

But there is one area that Safaricom has totally missed it.

Recovering lost money

While it is possible to confirm the name of the person you are sending money to in advance, and also it is easy to reverse money that is erroneously sent to a wrong number, it becomes a problem if that person has already used that money.

Every day, people send money to wrong recipients who quickly withdraw the money or forward it to another person, or even the money is automatically used to repay Fuliza loan which a recipient had. When this happens, the sender is only given the option to report the matter to the police who are too disinterested to follow up unless a colossal amount of money is involved. In any case, one might end up spending more money in legal proceedings than they already lost.

Perhaps, Safaricom does not want to be involved in legal tussles and that is why they do nothing about it. Unfortunately, this hurts their most vulnerable clients who are most susceptible to sending money to fraudsters or wrong recipients. In their hands, they should be able to deal with this problem by permanently blocking from their network anyone who withholds money that is erroneously sent to them. Some money transfer services such as PayPal do exactly that. The legal implications of this can easily be covered through their terms and conditions.

The other problem is associated with erroneously sending money to someone who has an active M-PESA overdraft facility called Fuliza. Once you send them money, part or all of the money is used to repay the loan first. If you attempt to reverse the money, Safaricom informs you that part of the money has already been used to repay the loan. This is negligent and borders robbery, as the person paid that money is Safaricom itself. They have the capacity to do the full reversal, but seem unwilling.

New strategy

Last month, Safaricom announced a new strategy as it turned nineteen, promising to be simple, honest and transparent across all its products and operations. Perhaps, this M-PESA issue is the perfect place that they can start applying that new ethos.

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