Kukula Fare and how Safaricom is missing out on the Escrow Business Opportunity

Here is a business idea for you dear reader – start an escrow business service that targets to cash in the MPESA Send Money, PayBill, and Lipa Na MPESA features. If this business idea interests you, then you should move in quickly before this suggestion reaches Safaricom. But don’t you worry, Safaricom is known to implement business ideas around MPESA that third-party players have tested and proven to work.

Two ideas immediately come to mind – The Chura MPESA to Paypal and Paypal to MPESA services. Chura was forced to discontinue their services then shortly after Safaricom partnered with Paypal to launch their Paypal Mobile Money services. Another business idea that was tried around MPESA by a third party before Safaricom took over was the ability to redeem Airtime erroneously bought via MPESA back to MPESA. And now it’s time for someone to cash in from the escrow business opportunity that’s waiting to be exploited.

Two reasons why there is a massive escrow business opportunity awaiting MPESA services:

  1. Kukula Fare
  2. The increased online-based business activities.

Before I explain the two reasons, allow me to foremost define what escrow is. According to this Investopedia article on escrow, “escrow is a legal concept describing a financial instrument whereby an asset or escrow money is held by a third party on behalf of two other parties that are in the process of completing a transaction.”

Kukula Fare

What that means is that if MPESA was offering escrow services, and I wanted to send some slayqueen some cash for my weekend entertainment, then instead of sending that cash directly to her, I would send it to an escrow MPESA phone number, paybill number, or till number. The slayqueen would be notified that she has received money from me, but the only way she can withdraw it is if for example, her phone is at the same location as mine, or if I have given her a withdrawal PIN, or some other practical verification method. In the event that the slayqueen doesn’t show up, I’d easily return the money from the escrow account to my own account.

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Increased online-based business activities

Today almost everyone is selling something online, mostly women outfits and wigs. There are those who are selling shoes too. The marketing of those items are happening on Facebook, WhatsApp status updates, Twitter, IG, and any other popular social media platform. People expect both friends and strangers in those platforms to buy their items – but here comes the tricky part – should one pay at delivery or when placing an order?

Payment on delivery is tricky for individuals who do not have the capacity to follow up on failed payments. Stories have been told of delivery guys who haven’t been paid upon delivering the items ordered, of those who pay a fraction of the value of the item being received, and of those who cancel orders upon receiving the items in question. Let my friend Oscar Omondi explain this more clearly:

There are also customers who order items, particularly buildings materials and farm produce, but refuse to pay the full amount on delivery, holding the supplier at ransom; in the case of building materials, the return transportation without the sale would be prohibitive. In the case of farm produce, most of the goods spoil in a matter of hours

Then we flip the coin. As a supplier you’d want to receive the payment when an order is placed, but can the customer trust you? From this angle we’ve also heard of stories of people who are paid in advance, only for them to switch their phones and their numbers become out of service. Or those who just stop receiving phone calls from disfranchised customers altogether.

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To resolve the trust issues outlined above, a number of third-party escrow service providers have sprung up over the years, but this business model is yet to pick up in Kenya – and none exist today for MPESA Payment services. I know Safaricom can step up after reading this and include an escrow option in their next MPESA App upgrade, before then, you can try offering that service yourself. Don’t ask me how.

Odipo Riaga
Managing Editor at KachTech Media
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