Safaricom's dominance in Kenya's mobile money market is facing a significant challenge, as its M-PESA market share has dropped sharply from 97% to 91% over five consecutive quarters leading up to December 2024. Meanwhile, Airtel Money has seen its market share grow from just 3% to 9% during the same period, according to a recent report by TechCabal.

This sustained erosion of M-PESA's dominance is a significant development in the mobile money market, and it raises questions about Safaricom's response to the growing competitive pressure. Despite clear signs of user frustration with M-PESA's pricing, the company has not made any adjustments to its transaction fees or cost structures. This has led to speculation about Safaricom's priorities, with some suggesting that protecting shareholder returns may be taking precedence over responding to market signals.

In Kenya, where informal work dominates and incomes fluctuate, mobile money has become an essential tool for daily cost management. Airtel Money's flat rates and zero-fee options for certain services have appealed directly to this survival instinct, making it a more attractive option for price-sensitive users. In contrast, M-PESA's complex, tiered pricing structure feels out of touch with the financial realities of most Kenyans.

Safaricom's reluctance to act decisively on the perception that M-PESA is expensive points to a deeper corporate strategy. As a listed company, Safaricom is built to prioritize shareholder returns, and mobile money is now its strongest revenue stream. M-PESA's fees are designed to maximize revenue while avoiding regulatory pushback. Lowering charges or simplifying fees risks cannibalizing this core profit driver.

However, the growing gap between user experience and Safaricom's response exposes a hard truth: M-PESA increasingly serves investor needs over those of users. Many Kenyans believe that Safaricom only responds when pushed, either by regulators or competitors. The company's delayed compliance with interoperability rules and slow pace in improving user experiences have reinforced this view.

Airtel Money's growth signals a real shift in the market, not a short-term fluctuation. The growth comes from free Airtel-to-Airtel transfers, lower cross-network fees, and cheaper withdrawals. Sending KES 1,000 to other networks costs KES 11 on Airtel Money, while M-PESA charges KES 13. Withdrawing the same amount costs KES 29 on Airtel, KES 2 less than M-PESA.

Still, Airtel Money struggles to break M-PESA's grip on the agent network. M-PESA agents dominate the country, and Safaricom may be resisting because it knows what's at stake: its agents were built with its resources, and opening them up could weaken a key advantage. Safaricom also benefits from deep market inertia, as users remain on M-PESA because it is embedded in everything, including rent, school fees, hospital bills, and government services.

The cost of running a reliable payment infrastructure is rarely discussed, and Safaricom invests heavily in maintaining M-PESA's network, including security upgrades, compliance with financial regulations, and expanding its reach to remote areas. However, without more transparency on the unit economics of M-PESA's pricing, users are left to assume that the fees are set purely for profit rather than operational necessity.

As shifting consumer sentiment becomes harder to ignore, M-PESA's challenge is no longer about infrastructure dominance. It must now prove it understands a society that budgets aggressively, hunts for value, and increasingly questions corporate motives. The question is, will Safaricom respond to the growing competitive pressure and adapt to the changing needs of its users, or will it continue to prioritize shareholder returns over customer needs?