Despite the seeming runaway success of mobile money in Kenya, a whopping 92% of retail payments for daily expenses are still done in cash among informal retailers and low-income consumers as at 2019! This statistic seems even more unbelievable considering that Kenya has an effective mobile money penetration of 100%.

Well, this trend is driven by low-income consumers and informal retailers who keep off digital transactions due to the high premium of up to 9.5% of the value of the payment they have to incurr for the convenience of a mobile money payment. This cohort of users is what the telco industry likes to refer to as ‘net recipients’ because they rarely initiate transfers from their own wallets in the quest to save on mobile money fees. A good example is that of my nanny in at home, whose salary we pay monthly via the M-Pesa mobile money system, at the insistence of my household’s Co-founder, CFO, and all-round better half. Now we do this in order to cover ourselves in terms of easy recording of payments, but also and more importantly for Patricia, and the hope is that this defacto Bank account will help her better manage her money.

Of course, this is an assumption, a big one based on our “middle-class reasoning” that the intuitive thing for her to do is save, pay, and generally operate her finances off the popular and efficient mobile wallet. I mean is this the best thing since sliced bread or what – wrong! At least not by looking at Patricia’s behavior, because she will promptly go to the nearest mobile money agent, and withdraw the bulk of the money which she will use over the coming month. The only money left in the mobile wallet will be the amount she intends to save using the embedded savings feature. I mean, after all, none of the informal businesses she frequents for her personal needs and few indulgences such as the local kiosk or her hairdresser will accept mobile payments, not unless Patricia can include the withdrawal fee in the payment.

Well as the title of this article intimates, this is a tale of two cities, one where the convenience and efficiency of mobile payments is a no brainer for me, but the associated costs and ecosystem infrastructure do not work for Patricia or her hairdresser. So whereas M-Pesa may be a huge success in the leafy suburbs and flashy malls of Nairobi, it is in the hustle and bustle of informal retail markets, and among low-income consumers in Kenya and beyond where cash is still King! When it comes to e-commerce, the story is even worse with  Jumia placing e-commerce contribution to retail at a paltry 0.5% as of 2018.

It is therefore within these financially underserved segments that Digiduka has found a purpose in our mission to bring digital services to the cash economy. Watch this space!

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