Following years of speculation, complete with a full scale M-PESA system upgrade dubbed G2 (for M-PESA 2nd generation platform), and relocation of the servers from Germany to Kenya, Safaricom finally opened the M-PESA API (application program interface) to the public early this month. Essentially, what this means is that a developer can seamlessly plug a given application ‘X’ onto the core M-PESA technical platform to facilitate mobile money transactions.
The versatility in the API’s integration capabilities present significant opportunities for the fintech industry. In fact, prior to the API’s availability to the public, providers had to make do with multitudes of stopgaps in an effort to bypass the integration barriers and improve the process of mobile money payments for third parties.
PesaPI for example, provided an open source API released under the BSD (lite) license that enables integrated applications to detect when a payment has been received. Webtribe, the company that has taken Nairobi County’s revenue collection digital and to great effect (by bringing to an end the use of printed receipts linked to heavy revenue leakage to the county) – through its flagship solution JamboPay, allows users to securely make and receive payments through mobile phone over the web.
So what can we expect from the much anticipated API? And how might its different interfaces covering both disbursements (Business to Customers) and service payments (Customer to Business and Business to Business) accelerate financial inclusion?
It is good news since the integration of M-PESA as an alternative payment option is fast becoming a deal-breaker for retail customers in Kenya, given the ubiquity and convenience of mobile money. In the financial year ending March 2015 for instance, Lipa Na M-PESA customers made payments worth Sh11.6 billion. No wonder Safaricom’s announcement that it would shut down M-PESA for two days in order to relocate the servers sent a kind of shivers throughout Kenya akin only to an announcement that POS devices would be withdrawn across the US. In Kenya, making payments via M-PESA is like clockwork. That’s why Kenyans say “can I M-PESA you?” instead of “can I send you by M-PESA?
Therefore, this move by Safaricom is one that could very easily spur lots of new innovations around fintech, depending on what lengths of creativity developers and start-ups are willing to go.
Whichever way they choose to leverage and integrate the M-PESA API – through its ability to automatically process payments receipts, payments disbursements and payments reversal – the opportunity to streamline the payments journey and disrupt the way people and businesses currently manage their money by digitally replicating (for example), is clear. It will optimize the customer’s financial management experience and offer added convenience. A low hanging fruit is social fin-tech applications, an area that is yet to be fully exploited which could benefit from experimentations using the API.
Increasingly too, improved product design, delivery, and user experiences as a result of such seamless integrations are believed to drive adoption and usage. This then leads to increased amounts of user data captured, providing additional insights into users’ behavioural and spending patterns; which is an opportunity to engage the financially excluded with more intuitive products. Also, the increased efficiencies as a result of reduced integration time and costs could be passed on to end users in terms of cheaper service provision.
Having said that, ecosystem players can promote developments in the financial inclusion space through exploitation of such fintech APIs by: conducting research and sharing data, promoting best practices, and supporting relevant developer community events.
Therefore, opening up of the M-PESA API is expected to be a pivotal moment for the sector, and it will be exciting to see what fintechpreneurs will do to push the 3 standout payment use cases mentioned above to their limit.
While the jury remains out on how committed Safaricom is to making the process as painless as possible in terms of: a quick and easy on-boarding process, great technical documentation on the API, sufficient developer support, robust marketing efforts, and optimal system uptime (at least 99%); developers and start-ups ought to take note and be wary of how the sector could benefit from the new generation of financial applications that they come up with.
Have you considered linking your application to the M-PESA core platform?
If so, the APIs have been published and are open to any developer who wishes to integrate. To set up or consume the APIs though, you will need to have a business account with M-PESA. Contact Safaricom on firstname.lastname@example.org for any queries and support in integrations.