7 Reasons Why I Would Not Start a Mpesa Agent Shop

While Mpesa has revolutionized financial transactions in Kenya and made many people millionaires, in 2024, I would not start a Mpesa business or even advise you to start it.

Why, you ask?

Let’s say that my reasons are more inclined toward technological advancements and innovations in the money transfer and payment side of Mpesa than the security threats and fraud that Mpesa agents still face.

But, other than those challenges, why wouldn’t I start a Mpesa agent shop in 2024, and why shouldn’t you do that?

Here are seven reasons I would not start a Mpesa agent shop in 2024.

1. The Mpesa shop market is flooded.

The Mpesa business is flooded with many Mpesa agent shops within small areas.

You will nearly get three Mpesa agent shops within a distance of 100 meters, bringing a division in the customer base that almost always affects the business.

The oversaturation of Mpesa agent shops makes the business very competitive and makes it hard for business owners to maximize profits.

2. Security Threats

Mpesa shops face a lot of security threats in Kenya.

Since money must be kept in the Mpesa shop, there is always the risk of robbery.

Other security threats include fraud and cyber attacks that might make these businesses lose their float in no time.

These security threats put the agents and their assets at serious risk, making it one of the most risky businesses in Kenya in 2024.

3. Profit Share

Safaricom determines the commission earned by each agent

Of course, after considering the transactions made by a shop and the percentage share agreed upon for agent levels,

Now, while this used to be some serious cash in the past, Safaricom’s profit share can no longer make you rich. Especially if you want to start a Kibanda store and don’t have much to invest.

The same statement is not true for super agents or agents with good float who are located in malls or other busy areas.

4. Limited Potential for Growth

Mpesa agent shops show no potential for growth.

The fixed profits earned and lack of growth opportunities make Mpesa a stagnant business.

5. Technological Advancement

The increasing trend in mobile money payment options in almost all sectors could diminish the need for cash withdrawals in Kenya.

As time goes on, Kenyan consumers are embracing mobile money payments, potentially reducing traffic to Mpesa agents.

Now, this might be good for Mpesa as a business, but it is a sign of low death for Mpesa agent shops. Lest they not increase the commission for deposits.

A move I reckon won’t make so much difference since consumers can also move cash from the bank to Mpesa directly.

6. Economic Distress

Mpesa agent shops make profits depending on consumer spending and stability.

Kenya, being one of the countries hit by inflation, it is common sense that Wanjiku doesn’t have money to spend, deposit, or withdraw.

This in 2024 can affect profitability.

7. Operational Costs

Some operational costs must be incurred while operating a Mpesa agent shop.

For example, agents must pay rent, pay staff, and pay for utilities.

The operational costs sometimes overrun the income, making most small Mpesa businesses run into losses.  Mostly in areas with low transactions.

Conclusion

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In conclusion, starting a Mpesa agent shop might seem like a lucrative venture at first glance, thanks to its widespread use and the integral role it plays in Kenya’s daily transactions.

However, as we’ve navigated through the challenges of the business, it’s clear that the glitter might not be gold after all. Especially in the context of agency shops.

Just to recap, market saturation poses a significant barrier to new entrants. Security threats is another risk that can be daunting to manage. Not forgetting, the profit-sharing model, that’s not fair compared to operational costs and economic uncertainties that can eat into margins.