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Mobile Applications

Kenya Startup Q&A: Square for Mobile Money?

With security risks in handling cash in Kenya and other developing economies rising, businesses are shifting from cash to digital money. Innovation in this sector is proving to be essential and inevitable. Mobile money providers have laid the foundations while innovative startups are providing SMEs with the platform to accept mobile and digital cash.

We catch up with Ben Lyon, the founder of Kopo Kopo, the startup that is making mobile and digital money transactions easier.

What is Kopo Kopo?

Kopo Kopo is a software company dedicated to building tools that help small and medium enterprises (SMEs) grow and prosper. We serve thousands of SMEs throughout East Africa from our headquarters in Nairobi, Kenya and are in the process of expanding to new regions.

Can you tell us about the basics of your company; the size in terms of employees, your target customers and clients etc.?

We’ve registered more than 10,000+ businesses to use our services over the last four years. Today, we employ a team of 40+ and work closely with mobile money providers and banks throughout East Africa.

We serve a broad range of SME customers – from roadside kiosks to international fast food franchises. One of our goals is to offer the smallest business the same suite of tools as the largest business, and at the same cost. We see technology as a way to give businesses an equal playing field.

How is Lipa na M-Pesa (Pay with M-Pesa) different from M-Pesa and where does Kopo Kopo fit in?

Payments involve a “two-sided market” in which individuals are issued an account (or wallet) and merchants are acquired to accept payments from that account. In this regard, M-Pesa is the wallet issued to an individual, and Lipa na M-Pesa is the service [that] merchants use to acquire M-Pesa payments.

Kopo Kopo was the first company in the world that partnered with a mobile money provider to acquire merchants. In industry terms, Kopo Kopo is known as a “Merchant Aggregator” - think Square in the US, but for mobile money. In addition to acquiring merchants to accept payments via Lipa na M-PESA, we also build value-added services on top of payment types such as SMS marketing, GROW Cash Advances [to the clients] business intelligence, etc.

How many other countries do you have under your business sleeve?

We’re currently operational in Kenya and have run pilots in Rwanda and Tanzania. We’re also in the process of adding a handful of new markets, but haven’t announced them publicly yet.

We’ve built best in class technology from our headquarters in Nairobi. We’d like to deliver that technology to SMEs worldwide.

When did you start, has the idea been with you for long and nurtured through time?

We incorporated in 2010, so Kopo Kopo is four now. We originally wanted to help microfinance institutions integrate mobile money with their core banking platforms and business processes, but we decided to change our strategy to SMEs in 2011. We’ve been focusing on SMEs 100% since 2011.

What/who motivated this tech innovation?

We’ve had many inspirations! Our whole team gets excited by the idea of digitizing commerce. We think electronic payment acceptance is the first step to a truly digital SME.

Our vision of success is to have millions of SMEs around the world using our software to manage and grow their businesses.

Why would you consider your business idea and company unique?

We were the first company to aggregate merchants for mobile money providers globally, and we were the first payment processor to offer unsecured merchant cash advances in Sub-Saharan Africa. We’re willing to take big risks to push the frontier forward.

We’re dreamers, but we’re also doers. And we love what we do.

Do you also offer transaction services to other mobile money service providers such as Airtel and Orange?

We’re in the process of adding new payment types now. In Tanzania, for instance, we enabled pilot customers to accept both TigoPesa and Vodacom M-Pesa.

Who are your competitors and what makes you better/worse than them? What technology are they using that you do not have access to, if any?

We’re actually without rival at the moment. There are countless companies that do pieces of what we do, but no one offers our full suite of services. The industry’s evolving, though, and we know competitors will come. In anticipation of competition, we’re focused on providing the best customer experience possible.

In your opinion would you say that Kenyan and East African ingenuity potential is underutilized? Why?

Sure, but that’s true everywhere. The truth is: this is an amazing time to be in East Africa. The pace of innovation is accelerating and the cost of innovation is dropping. I’m excited.

How has your company impacted/facilitated the ease at which clients are benefiting especially in rural areas?

We primarily serve SMEs in urban areas, but we do have several hundred customers in rural settings (usually agrovets). For them, the value proposition is increased security, lower cash handling costs, and solving the “change problem.”

What is the technology behind your operations? Do you also offer an app on the web where clients can transact?

Our customers can access our services via Android, Web and SMS. Our platform is built in Ruby on Rails and is hosted on Amazon Web Services, which offers bank-grade security and dependability.

In your business, what do you consider as the greatest achievement? Do you have some statistics to share with us?

We’re a company of firsts. We’ve changed and, in many ways, defined our industry. We like to think of ourselves as “the mouse that roared” because we’re just a startup, but we’ve disrupted large institutions and processes.

Are there any challenges in your operations, any obstacles that you feel are dragging you in terms of business? How have you addressed them?

Sure, there’s a new challenge every day! But paradox and uncertainty is the natural state of a startup. We’re comfortable tackling challenges head-on, no matter how large or how small, and we have the right team to power through them.

Can you comment on the latest debate on Safaricom and Equity Bank over the SIM overlay? How is this impacting/affecting/facilitating your business potential?

We’re insulated from developments like these because we sit on the “acquiring” side of a transaction [i.e., help a merchant accept a payment type]. Equity Bank is on the “issuing” side insofar as they’re giving consumers a new payment type. If our SME customers want to accept that new payment type, we’ll make that possible.

More importantly, competition is a good thing. When firms compete, prices drop, quality improves and customers win. We’re excited to see how the industry adapts in the coming months.

How is your company coping with the limitations posed by illiteracy levels among the Kenyan and other segments of your market areas?

We’re primarily focused on SMEs in urban areas, so our experience in this regard is too limited for us to offer any insights.

What are your shorter and long-term goals?

We aim to serve millions of SMEs worldwide without compromising our essence. We care about what we do, and we want that to show every single day.

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Daniel Muraga

Daniel Muraga is an experienced online writer and communications professional based in Kenya.

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