Is M-Pesa-Paypal Really the Better Option?

You’ve got to love mobile banking, especially the revolutionary M-Pesa which has transformed sub-Saharan Africa. The rapid expansion of mobile banking has reduced poverty in Kenya, significantly reduced transaction costs, and enabled quick money remittance with only a mobile phone.

Paypal, on the other hand, has revolutionized the freelancing market with their online remittance platform. The partnership between Paypal and M-Pesa could not have come at a better time, and the Kenyan freelancing space was for a long time held captive by third-party wheeler-dealers.

Mind you, the Paypal and TransferTo collaboration has made the movement of funds between M-Pesa and Paypal possible.

Who qualifies to use the service?

*Be a registered M-PESA customer in Kenya
*Have an eligible Kenyan PayPal account
*A user should have a Google account and an android device (weird qualifications there)
*A user should also link their PayPal account to their M-Pesa account.

Considerable benefits of using the service

(I) Freelancers can withdraw money from their PayPal accounts to their phones with just a few clicks.

(II) The waiting period has reduced drastically. It used to take 8 business days to withdraw my funds using Equity bank, but Safaricom has reduced that to 2 hours minimum.

(III) Depending on the transaction value, a user can withdraw their money within 3 calendar days. Equity bank withdrawal usually takes 3 business days, which don’t take into account holidays and weekends.

(IV) The service will enable Kenyan freelancers to securely and efficiently buy goods and services all over the globe. If my web hosting is due, now i can easily top up my M-Pesa balance and deposit it to PayPal to settle the bill.

(V) M-Pesa has more than 140,000 agents across the country, making it super easy to withdraw cash anywhere and anytime.

(VI) Safaricom prides itself for efficient and quick customer service; thus, any M-Pesa customers will be accorded the same benefits when they use the Paypal service.

(VII) Chances that your money will be safe and secure are extremely high, hardly do i hear cases of M-Pesa customers losing their money unless its through scams. Convenience, when withdrawing and depositing money to your account, is guaranteed.

(VIII) Assuming you do your PayPal transactions from a cybercafe or your office and you do not own a smartphone, you need not worry about your money being credited. Safaricom will send you an SMS right to your phone and email notification.

Are there substantial downsides to the PayPal-M-Pesa connection?

Is there anything that comes without its downside? Well, i doubt anything can be all positive. Most new products come with many flaws since companies believe free feedback from their customers will help perfect whatever they are selling.

To start with, the major downside of the M-Pesa-PayPal partnership is transaction charges. Already M-Pesa charges are considered too high by many Kenyans, especially if you feel that every single transaction no matter how small attracts a fee.

According to Safaricom’s FAQ page, a withdrawal will attract 3% fee, but this is after conversion of the amount from USD to Ksh. Discernibly the same amount attracts a conversion rate depending on the prevailing USD<>Ksh exchange rate. That will further lower the amount you had expected.

Let’s say my web hosting or domain is due for payment in the next half hour. Well, in that instance, M-Pesa will not be of help to me; actually, i will end up paying a fine or lose my domain altogether. The reason being that it will take at most 4 hours to process an M-Pesa to PayPal top-up. Now that’s a long time, especially if you have an emergency like mine.

We are all aware of Safaricom’s transaction limit of Ksh 70,000 and Ksh 140,000 cap on the daily withdrawal limit. This will work fine if your transaction involves lesser amounts or if you usually withdraw small amounts from time to time. The problem is such a cap will work unfavorably for high volume users.

My main concern with online banking platforms is fixed charges for any transaction you conduct. M-Pesa- Paypal has fees written all over it. Paypal will charge you 4.4% +$0.30, and if a currency fee is necessary, a charge will be added. On the other hand, M-Pesa will cost you 3% for withdrawal and 4% to top up to Paypal. Don’t forget M-Pesa transaction charges once you receive the money in your phone; fees range from Ksh 10 to Ksh 300 depending on the amount.

Whenever i read ‘collaboration’, ‘partnership or some other fancy coming together word, my body cringes. I bet many users whose accounts do not link or who have any query get very little help from both parties. Safaricom will refer you to the PayPal website and PayPal if they do answer you they will refer you to their community page where ‘resourceful info’ is found.

Remember M-Pesa has a cap on amounts transacted so obviously there is no way they can serve the thriving e-commerce market in Kenya. As of now, the partnership only caters for individual users. Nobody knows if they have a plan of integrating business website owners.

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