How an M-PESA Agent Business Operates

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New to M-PESA or need just to know how an M-PESA Agency works.

 

First, what does an M-PESA Agent do?

1. Receiving deposits from customers
2. Offerings Withdrawals(give cash) to customers
3. Registration of new customers
4. Customer education.
5. Compliance with Safaricom KYC (Know Your Customer) and AML (Anti Money Laundering) requirements.
6. Branding their outlets to Safaricom requirements.
7. Ensuring all required trading licenses for their premises are up to date.

 

Acquiring an M-PESA Agent Line (Till)

To operate an M-PESA Business you must have a till with an Agent number.

The M-PESA Agent Till operates or runs on a different type of SIM (Subscriber Identity Module Card) which is customized for the above functions of an agent though can also be used for other Safaricom services e.g. Calls and SMS.

You can get this special M-PESA agent SIM from Safaricom or they can customize a new unused SIM placed on your phone using Over The AIR Activation (OTA).

There are two ways to acquire an M-PESA till:

 

1. Applying Directly via Safaricom.

This involves meeting all the set requirements for being an agent as stipulated by Safaricom.

The requirements are available from Yankees Limited here or from Safaricom Limited here.

The requirements are a bit stringent for some investors who just wish to include M-PESA into their existing businesses as an add-on service.

It also takes quite some time for you to get approved.

This option suits investors who want to run M-PESA exclusively as their core business.

 

2. Applying via a Safaricom M-PESA Aggregators

This is the easier option of setting up an M-PESA business.

It allows one to setup an M-PESA outlet fast and with fewer requirements than the first option.

This option involves approaching an M-PESA Aggregator, this is a company that is registered and recognized by Safaricom as an M-PESA Aggregator.

The Aggregator will always need to know details about where you want to locate the new till.

If the new location is satisfactory to the Aggregator, then an M-PESA Supervisor ( Safaricom staff who monitors and evaluates operations of M-PESA Agents) evaluates the new outlet and might give a green or red light depending on whether you meet their criteria for new outlets.

The whole process can take between two weeks to three months or more.

Once approved you will need to invest in e-float (money on your M-PESA phone for deposits) and liquid cash for withdrawals, brand your outlets according to M-PESA guidelines and probably get some training in AML/KYC policies.

Here, also there are two options; 
 

(1) Aggregated Till;   

1. Here the Aggregator applies for you a new till.
2. Safaricom Limited knows the till is yours but under the name of the Aggregator.
3. Safaricom sends your agency transactions commissions directly to you.
4. The M-PESA Aggregator gets only 20% of your commissions send directly to him by Safaricom.
5. A stringent formal Aggregator-You M-PESA agreement applies modeled along a sample Safaricom M-PESA Aggregator-Agent agreement, the sample is here.
6. Goodwill in the form of an application processing fee normally applies.
7. You decide the amount of till float and cash at hand to start your agency with.

In this option you are in control and in charge of your float, profits and your destiny. 

(2) Sublet-ted Till; 

1. Here the till belongs to the Aggregator.
2. Safaricom Limited does not know the till is yours.
3. Safaricom sends your agency transactions commissions to the Aggregator.
4. The M-PESA Aggregator keeps 20-30% of your commissions and sends you your profits at their own sweet time.
5. A formal or informal agreement might apply, but that is a private arrangement and Safaricom is not cognizant of it.
6. Goodwill fees normally apply.
7. The Aggregator decides the amount of till float and cash at hand you need to start your business with.

In this option you are under the direct control of the Aggregator, although set up times could be faster depending on if the Aggregator has a ready tills he wants to relocate (most probably from someone else who has fallen foul with them), so be very careful with this option.

 

M-PESA Daily Operations

As an agent, you get to do two major transactions i.e. deposit taking and client withdrawals with both will affect your e-float (agent e-money, phone float) or liquid cash.

Let’s start by first explaining these two types of transactions:-

 

M-PESA Withdrawal

This transaction happens when a customer has e-money on his/her phone and wants to exchange it with liquid cash.

This transaction involves the user sending (withdrawing) that value to your agent till via the Withdraw cash option in his phone M-PESA menu.

This transaction increases your e-float money value but reduces your cash in hand value.

 

M-PESA Deposit

This is the opposite of a withdrawal and it’s when someone has liquid cash and wants to have e-money on their phone.

This type of transaction enables M-PESA customers to have e-money to enable them to send money to different accounts (people or companies), pay for services, buy goods, airtime and other M-PESA based services.

A sample table below explains how e-float and cash at hand (balance) is affected by the two transactions.

Transaction Type
Withdrawal	Deposit	E-float balance	Liquid Cash Balance
-	-	5,000	5,000
500		5,500	4,500
-	200	5.300	4,700
150	-	5,450	4,550
1,000	-	6,450	3,550

 From the table above, let us assume you started your M-PESA business with KShs 5.000 in e-float and KShs 5,000 in liquid cash.

Hence as can be seen for a customer withdrawal, your e-float value increases and your liquid cash decreases by the same value.

The opposite happens when you make a deposit for a customer, your e-float value decreases and cash at hand increases all at the same value.

An increase in e-float value leads to a proportionate decrease in cash at hand and so on.

 

So How do You Make Money Here?

When a customer performs a withdrawal, they are charged a withdrawal fee depending on the amount they are withdrawing, the higher the value the higher the fee charged.

It is from this fees that your commissions from.

The more transactions you carry out, then the more commissions you make.

Also note that deposits too, get you commissions, when the customer withdrawals or uses his e-money to pay for services like airtime or pay KPLC.

 

Low and high moments

Business is business and hence not perfect, so once in a while you will run into situations like having excess e-float or liquid cash.

This occurs when you are getting too many transactions of the same type without transactions of the other type so as to maintain a balance e.g. you get many deposits without withdrawals, you’ll end up in a situation where you can’t take any more deposits because your e-float value is diminished or finished.

In such a situation, you need to buy more e-float value and quick, since deposit business is passing you by, and it is not prudent, however temporal to just let business that has walked in to walk out.

Therefore in such a situation (needing e-float value) you can get it from an M-PESA Aggregator, a bank or a fellow agent.

This process of creating a balance between your e-float and cash balances is referred to as Float management.

Most banks offer e-float management services for M-PESA agents who might wish to exchange their excess cash or e-float.

As can be seen getting more e-float value is easy.

The tricky bit is how to get more liquid cash at hand, since this is a physical commodity that you either go for (say a bank, an ATM, etc) or is send to you via a courier and in either case involves carriage cost.

 

M-PESA Commissions

Basically what you do as an M-PESA Agent will be for you to take deposits and accept withdrawals.

All these transactions attract different rates of commissions and greatly depend on the volume and value of transactions you perform throughout the month.

Therefore invest adequate funds in e-float and liquid cash, depending with your location, time of month, season of year, since low funds (e-float or cash at hand) might hurt your agency commissions.

 

Want to Start Your Own M-PESA Outlet The  Easy Way?

 

Do the following;

1. Have a national ID.
2. Have your own and working email address.
3. Have access to internet, a photocopier or a mobile phone with a camera.
4. Locate your premises, it can be under a tree if you so wish (innovative actually) and brand able (for the tree you need an M-PESA sign post pointing to your tree, on the tree you need an M-PESA placard, brand the table front and the top, etc)
5. Access to KShs. 30,000 or more depending with expected volume of business in your location.
6. Visit www.yankees.kbo.co.ke or www.yankees.co.ke and check out their current application processing fees and application procedures.

Yankees limited are great and geared to making owning and operating an M-PESA outlet as simple and painless as possible.

For e-float needs they have an e-float okoa jahazi service for their aggregated agents at no extra fees.

For the cash at hand needs they are currently working on the modalities on how to get it on your hands as fast and cheaply as possible.

 

Existing Agents Needing to Shift to a Better-Option: Yankees Limited

 

It is quite simple, you need the following;

1. Have an existing M-PESA agency.
2. Have a national ID.
3. Have your own and working email address.
4. Have access to internet, a photocopier or a mobile phone with a camera.
5. Access to required application processing fees.
6.  Visit www.yankees.kbo.co.ke or www.yankees.co.ke and check out their current application processing fees and application procedures.

Yankees Aggregation processing for existing agents takes a day or two and also offers the existing agent a new free till.

If you have any questions or compliments, don’t hesitate to post them below.

 

Thank You.