Safaricom's M-PESA, the dominant mobile money service in Kenya, has seen its market share decline for the fifth consecutive quarter. According to data from the Communication Authority of Kenya (CA), M-PESA's market share fell by 2.3 percentage points to 91% in Q4 2024 compared to Q3. Meanwhile, Airtel Money, its closest competitor, grew its market share from 7.6% to 8.9% during the same period.

The sustained decline in M-PESA's market share signals a shifting competitive landscape in Kenya's mobile money ecosystem. Increased interoperability since 2022 has made it easier for customers to switch service providers. Airtel Money's aggressive promotions, lower fees, and increased agent networks are drawing more customers to its platform.

The growth in Airtel Money's customers suggests that many new mobile money accounts have joined its platform. According to the CA, subscription to mobile money services grew by 4.1 percent to 42.3 million, translating to a penetration rate of 82.1 percent during the reference period.

Airtel Money remains the more affordable option for transactions, which could also explain why it's eating into M-PESA's market. Sending KES 1,000 ($7.7) to other networks costs KES 11 (0.085) on Airtel Money, compared to M-PESA's KES 13 ($0.093), while withdrawing the same amount costs KES 29 ($0.22) on Airtel Money—KES 2 less than M-PESA.

Airtel has also strengthened its agent network, partnering with supermarket chains like Naivas to host points where customers can deposit and withdraw cash. M-Pesa has over 160,000 agents spread across the country, giving it an edge over Airtel. However, Airtel's strategic partnerships are helping to bridge the gap.

The Central Bank of Kenya (CBK) 's plan to implement agent interoperability, which would allow users to access mobile money services from any agent, regardless of the provider, remains unfulfilled despite the regulator's commitment to roll it out by 2024. This delay could be contributing to M-PESA's decline, as customers are forced to choose between service providers based on their agent networks.

Despite its decline, M-PESA is still the dominant mobile payments platform, handling over 30 billion transactions with an estimated KES 40 trillion ($308.8 million) in value. Airtel Money has an estimated eight million registered users. However, the growth of Airtel Money and the potential rollout of the CBK's Fast Payment System (FPS) could further challenge M-Pesa's dominance in the market.

The FPS, which will allow instant transactions across all financial institutions, including banks and payment service providers (PSPs), could level the playing field for mobile money service providers. This could lead to a more competitive market, with M-PESA facing increased pressure to adapt to changing customer needs and preferences.

In conclusion, M-PESA's decline in market share is a significant development in Kenya's mobile money ecosystem. As Airtel Money continues to gain ground, M-PESA will need to reassess its strategy to remain competitive. The rollout of the FPS and the implementation of agent interoperability could further shake up the market, leading to a more dynamic and customer-centric mobile money landscape in Kenya.