Safaricom and PesaPoint sign banking agreement

Safaricom and PesaPoint have entered into a partnership that will allow M-PESA registered customers to withdraw money from PesaPoint ATMs using their Safaricom phones, eliminating the need for ATM cards.

M-PESA, launched in 2007, allows Safaricom customers to send money via mobile phone, while PesaPoint owns independent ATMs (automated teller machines) that allow customers from several banks to withdraw funds.

The companies took a year to formulate the agreement that will enable subscribers to access a maximum of 20,000 Kenyan shillings (US$299) per withdrawal at any time of day, increasing the M-PESA network by 110 agents in 46 towns.

The two companies took the time to formulate the agreement in order to ensure that it is as secure as possible, said Safaricom CEO Michael Joseph.

Customers will need to request a withdrawal form from the M-PESA menu in order to receive a one-time ATM authorization code, which will be used together with a Safaricom phone number for access, said Bernard Mathewmann, PesaPoint managing director.

PINs (personal identification numbers) for the withdrawal process will expire after 2 hours in a bid to keep the procedure secure.

Kenya is the first country to make use of a cardless transaction system at ATMs.

The agreement spells doom for the banking sector by eliminating the need for bank accounts, and banks should work hard to develop their own mobile banking platforms, warned Sidney Wachira, a Nairobi technology expert.

"The era of conventional banking is gone," Wachira said. "Banks had better wake up to the reality and threat of M-PESA. But, for the ordinary Kenyan, this is good news."