Digital Transactions — A Comparison Between India’s UPI and Kenya’s Mpesa

By  |  March 4, 2024


This is how a foreigner described buying vegetables at a local Indian market using just his phone. But this was no ordinary tourist but the German federal minister for digital affairs and transport, Volker Wissing, describing India’s blazing Fintech solution, Unified Payment Interface or UPI.

In the recent years UPI has grown rapidly thanks in part to efforts by the Indian government. Prime minister Modi and Foreign affairs minister S. Jaishankar have been two key figures for UPI expansion in India and Asia and the whole world. Launched in 2017, UPI has now grown and is available in Singapore, UAE, Saudi Arabia, USA, Hong Kong, Australia, Sri Lanka and Mauritius. The growth is also felt at home as UPI has over 500 million merchants who use the system to accept money for their business.

But before UPI was conceived Kenya’s Telco company, Safaricom, was rolling out its own leading innovation in partnership with its associate company Vodafone. The name of this new technology is MPESA. In 2007, MPESA was one of a kind and was initially met with a lot of scepticism. In the initial months after rolling out MPESA, out of 9 million Safaricom sim card holders only 200,000 had subscribed to MPESA representing a mere 2%. Undeterred Safaricom pushed on with its MPESA platform leading it to become the most valuable company in East Africa and at one time crossing A trillion shillings in terms of Market cap, becoming the first of its kind.

However, Safaricom’s market cap has fallen to 600 billion Kenya Shillings in just over two years.

In today’s modern era of technology, one may struggle to make sense of the achievements of Mpesa and UPI. After all we have PayPal, Venmo, Cash app, Apple Pay, Flutterwave and Chipper Cash among many others. The primary issue is that they are not designed for transactions among people living in developing countries. PayPal is at the heart of court cases as it has continuously frozen accounts from various African and South American countries, leaving the holders stranded without access to their funds. Venmo, Cash app and Apple pay are not supported in a great majority of developing countries while Flutterwave and Chipper Cash are designed cater for expats who are sending money home and both are weak in handling multiple transfers. Hence, one can say UPI and Mpesa are massive as they purpose to serve the local everyday citizens.

MPESA at its peak was feted to be revolutionary but it has largely remained domiciled to Eastern Africa even with the recent expansion to Ethiopia, Mozambique and Lesotho. In contrast UPI has already crossed continental borders and is available in UK, France and the States. One of the reasons is that UPI transactions among individuals are free of charge for customer accounts, and merchants who accept UPI payments are charged 1.1% for amounts over 2000 rupees or 24 USD. In stark contrast Mpesa is only free when sending an amount lower than 100 Ksh/ 0.7 USD and the next transaction amounts are put in bands with each band costing higher than the previous. In example let’s take two scenarios, one of an Indian sending 100 USD to a friend and a Kenyan sending 100 USD to a friend. An Indian will not be charged anything using UPI (assuming he has a fully digital wallet that’s not linked to any card or bank account)  while the Kenyan using MPESA will be charged 100 Ksh / 0.7 USD which is 0.68% of the amount being sent. This is still cheaper than moving money from your bank account to MPESA account, some banks charge as much as 10% to move a dollar to your MPESA account. These charges have made heavy users of MPESA, who operate on tight margins, shun away from the platform and depend on traditional cash operations.

Another reason why MPESA’s growth has stagnated is the Government’s position on Safaricom. The Government of Kenya owns about 36% of the organisation, with the rest being owned by companies and individuals. For this reason, many believe Safaricom has won lucrative contracts worth hundreds of millions of Dollars. Many suspect the Kenyan NIS (National Intelligence Service) blocked the proposed merger of Safaricom’s top opponents, Airtel and Telkom.

It was reported that the merger would cause a national security threat to Kenya. This has caused a distrust among investors who believe elements within government are conducting a sort of insider trading.

Furthermore, MPESA has failed to Integrate with other global platforms. MPESA xpress billing which is connected to Google Pay is always down while users experience and complain of the difficulties of registering for Mpesa GlobalPay virtual Visa card service. On the other hand, UPI has successfully integrated with Singapore’s PayNow, which is linked to Malaysia’s DuitNow and GooglePay.

Thus, I reach the conclusion that UPI will probably spread its tentacles further into the world, soon surpassing one billion users, while Mpesa dominates the East African market.

Feature image courtesy: Volker Wissing purchasing goods using UPI (photo shared by the German embassy in India)

Author: Ray Munene

Ray Munene is a Machine Learning engineer with a passion for technology and a focus on African-oriented solutions, reflecting a dedication to innovation and exploring new avenues in the tech industry. With a background in both Economics and Software Engineering, he brings a wealth of experience to his endeavours. His commitment to leveraging technology for African solutions aligns with the evolving landscape of the continent, transitioning gadgets from mere communication tools to unique service delivery platforms.

Note: This is a guest post, not part of the Weetracker editorial desk. Views and opinions are solely of the author and do not necessarily represent Weetracker’s views. Weetracker is only the publishing platform for this guest article.

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