The new entrants Equity Bank and Zioncell Kenya, will they revolutionalise this industry?

My thinking has always been that Mpesa is 'pure theft'. My believe is founded on, Mpesa was supposed to assist mainly the unbanked population, small traders etc A small trader, for example a shop owner gets 50 cents profit or 1Ksh for each item sold. To send Ksh 5,000 in Mpesa would cost the trader ksh 33 and the other trader will use Ksh 66 to withdraw. Thus the trader will have to sell 33 items and the other trader 66 items to be able to make a single mpesa transaction of Ksh 5000. Won't this impoverish the traders more?

I may be wrong, the tariff should be extremely low for it to achieve the initial intended objective.

I hope the new entrants will make this facility cheaper for the unbanked population.

If you think dr.mwangi is asleep,wait and see how mpesa will be shaken.

Also to put a stop to mpesa draining deposits held in EB. You will rarely need to withdraw from yr EB account to do mobile money transaction. They will have acess to more money in deposit accounts for long-term, to do more profitable biz - loans @ low interest rates. It I hope they also get into voice and data as cheap 'add-on' services

Price undercutting only works until a certain threshold is reached. The target gives up superprofits, and the instigator will want to make some money as well. There is money to be recouped as investing in telco infrastructure is hugely expensive. This is where Yu and Airtel lost the plot, they slit their own throats with an untested too cheap high volume model. A subscriber who is not covering your cost and giving something small on top is worthless and as a business you shouldn't chase after their custom.
It will be a duopoly, the relief to customers will only be slight.

To some extent yes but not entirely. I do not think Safaricom ( I may be wrong) is doing the same. Theirs is not about cost and something small on top. Check their Financials on Mpesa segment.

You forget one critical element that also goes into the transaction costing: commissions for the agents.

Reality is, if the service becomes too cheap, commissions/margins for the agents become squeezed and operations become unattractive. It then becomes very difficult to recruit new agents and retain existing ones. Incidentally, these aren't my words but those of an industry insider.

Apparently, this is the problem that has bedevilled Airtel's money transfer service. It's cheaper tha mpesa, yes. But where are the agents?

There are already alternatives to Mpesa. Most banks now have billers on their mobile banking platforms. You now don't need to move money from your account to Mpesa (which will cost you about Kshs 60), the pay a biller through their paybill which will cost you another Kshs 33 - 105 depending on what you are paying for.

Most pay tv and utility companies have already integrated to banks and they offer account to account transfers at minimal cost to you. SCB, I&M, Barclays, BOA, Ecobank, NIC among others have this!

This should have been the model. There should be no standalone agents. The agents should be existing businesses, thus mobile transfer business just one of their income source among other sources.

@stockmaster currently you find numerous agents in one location,It does not make business sense.