How to Start Mpesa Business in Kenya

MPesa is a mobile-based money transfer service launched in March 2007 by Safaricom. There are many people starting MPesa businesses in Kenya. The MPesa business is becoming increasingly popular due to the high number of people requiring it to send and receive money, pay for goods and services, and transact business.

There are also many people who have subscribed to Mpesa. MPesa shops are profitable and relatively easy to start and operate. You can decide to operate an MPesa shop as your primary business or as a part-time business. The daily operations of an MPesa outlet include depositing cash into accounts, registering new MPesa users, and processing cash withdrawals for customers.

Requirements to Start an Mpesa Shop in Kenya for a Standalone Agent

The following are the requirements for starting an MPesa agent business.

You need to register your MPesa business under a registered Limited Company. The company should have been operating for at least six months.
You must have a minimum number of three outlets that are operating under a registered limited company.
You need to make an initial deposit float of Ksh 100,000. You must also ensure that you maintain the same amount at all outlets.
Make sure to operate those Mpesa businesses in different counties.
You must provide Safaricom with business permits for each of the outlets to get an MPesa line, VAT and tax certificates, police clearance certificates, and a banking license from a reputable financial institution.
You will then need to fill out the MPesa agent head office application form and the MPesa agent store application form.

Upon submission of all forms and meeting all requirements, you will be given a till number to use.

What You Need to Know Before Starting an MPesa Business

There are two categories in which you can operate an MPesa outlet.

1. Agent /Aggregator

Operating as an agent is more profitable than being a sub-agent. You need to go through the entire registration process. Safaricom pays MPesa agents directly.

Minimum M‐Pesa Investment for Agents

An agent is expected to invest the following amounts of money:
(i) Kshs 100,000 per outlet for a float
(ii) Kshs 100,000 for SIMEX (SIM replacement cards).
(iii) Kshs 100,000 per outlet for additional outlets for float.

2. Sub-dealer/ Sub-agent

It is more affordable to operate as a sub-agent than as an aggregator. MPesa sub-agents are the most popular and are distributed all over the country. To operate a sub-agent MPesa business, you need to work under a licensed Safaricom Agent.

It is the work of the agent to provide the sub-agent with a till for transactions. Sub-agents get 80% commission, while the agent gets 20% commission sent directly by Safaricom. MPesa sub-agents must maintain Mpesa minimum float of Ksh 30,000.

How MPesa Sub-Agent Shops Should Work

MPesa agents recruit sub-agents to work under them, but their lines are aggregated (directly registered by Safaricom).
The agent needs to provide the sub-agent with a till to carry out MPesa transactions.
Sub-agents then need to get store management tills to manage the float. Sub-agents can get them at KCB Bank.

However, many MPesa agents do not follow due process. The agents fail to register sub-agents with Safaricom. Instead, they recruit them as employees.

The agents receive earnings on behalf of the sub-agents. They then determine how much to pay them. The agents pay sub-agents between 60% and 70% commission, while Safaricom requires them to pay 80% commission.

Also read: How to start a laundry business in Kenya.

Disadvantages of Operating MPesa Sub-Agent

MPesa agents decide what float they want to maintain per sub-agent store.
Sub-agents lose control over the float since the agent manages it.
Violation of Safaricom operational requirements by an MPesa agent will have his till and that of the sub-agents locked.

How Much Do I Need to Start Mpesa Business in Kenya?

The cost of starting an Mpesa shop in Kenya depends on whether you are starting a standard outlet or a sub-dealer store.

For Standard Outlet

To start a standard Mpesa outlet in Kenya, you need at least Ksh 400,000. The following is a startup cost breakdown for 3 Mpesa agent shops in Kenya.

Minimum float of Ksh 100,000 in every store - Ksh 300,000
Business registration - Ksh 15,000
Branding - Ksh 20,000

For a sub-dealer

To start an Mpesa sub-dealer business, you need around Ksh 70,000. You need a minimum float of Ksh 30,000. You will also need goodwill of Ksh 15,000 for the non-aggregated line. However, you will need to work under a registered Mpesa agent, and you will be paying them commission for using their line.

How Much Does Mpesa Line Cost?

The cost of Mpesa Line depends on the agent you are working with. The agent can charge you between Ksh 10,000 and Ksh 20,000 for an Mpesa line. You will also need to have a minimum float of Ksh 10,000 in your line.

How to Run a Profitable MPesa Shop in Kenya

Being highly profitable, the MPesa business is very competitive. Therefore, you need to come up with excellent strategies to stand out and maximize your profits. It would help if you looked out for the following things:

1. Location

Since the business is highly competitive, your success or failure will depend on where your shop is located. It will help if your MPesa shop is situated where there is high human traffic.

Robbers and thieves target MPesa businesses. You need to be very careful when dealing with your customers. Make sure you can differentiate between fake and genuine notes while transacting.

2. Always Have Enough Cash

If you want to have a successful MPesa business, make sure you have enough float in your phone. You can lose many customers when they visit your shop and you do not have enough money.

Is Mpesa Business Profitable in Kenya?

Yes. Starting an Mpesa business in Kenya is a profitable business idea. There are thousands of people making a living from Mpesa businesses alone. M-Pesa agent profit for busy shops is over Ksh 50,000 every month.

For business consultancy, strategic planning, organizational development, market research, financial management & accounting, risk management and business plan writing at an affordable fee, please reach out to us through a phone call 0728 621 138 or WhatsApp, or email: [email protected]

Challenges Facing the Mpesa Business in Kenya

If you are planning to start an Mpesa shop in Kenya, then you need to be prepared for the following challenges:

The competition is high since it is a flooded business.
Mpesa shops are prone to attacks by thieves to steal money.
You must follow and adhere to Safaricom's strict rules.
When running an Mpesa shop, you are technically self-employed. You are employed by Safaricom and will be getting a commission from Safaricom.
Mpesa shops require high startup capital.

Summary

If you have been wondering how to start an Mpesa agent shop, you can follow the above tips. To run a successful MPesa business, you must stand out amongst your competitors since it is very competitive. You must also be compliant with Safaricom rules and regulations. If you fail to do so, your MPesa line will be suspended and your float locked.