Safaricom subscribers can now operate mobile-based savings accounts, earn interest on their deposits and borrow small loans in a move set to raise competition against banks, saccos and shylocks.
The telco Tuesday launched the product dubbed M-Shwari, a virtual banking platform, in partnership with the Commercial Bank of Africa (CBA) accessible by Safaricom’s subscribers under its M-Pesa service menu.
Subscribers will be able to save between Sh1 and Sh100,000, the maximum deposit on M-Pesa, and earn an interest of between two and five per cent.
CBA did not specify what amount qualifies for what interest rate. It also did not identifying the period over which the savings will earn interest, with the lender retaining sole discretion in setting the parameters.
The interest on M-Shwari deposits is, however, higher than that offered by commercial banks, meaning that they might have to raise their interest on the savings they have been taking for between zero and 1.6 per cent.