Traditional mobile money transfer companies in Kenya could be headed for tight competition if other large volume traders are given licences to enter the field.

Kenya’s largest telecoms provider Safaricom dominates the mobile money space in Kenya with its M-Pesa service. There are 25.1 million mobile money users in Kenya, according to the Communications Commission in Kenya (CCK).

According to Kyai Mullei, co-founder of mobile fundraising tool M-Changa, the market for mobile money transfers; though, is about to change.

“What we are seeing now is that businesses with huge client bases like supermarkets and banks would like to offer their clients competitive rates to transfer money or buy their products,” Mullei told ITWeb Africa.

Equity Bank and Nakumatt Supermarket are among companies that have already made applications to the CCK for Mobile Virtual Network Operator (MVNO) licences.

And by selling their own SIM cards, such companies could set up their own mobile money transfer service.

Also, mobile virtual network operators (MVNOs) don’t usually have to set up their own infrastructure but can ride on existing telecom companies’ infrastructure, avoiding the day-to-day management of the system.

“A big issue we have with mobile money transfer in Kenya is that it is essentially a monopoly. That means that for every company that uses mobile money services as part of their business transactions - there is no choice of operator and essentially no choice of rates you pay for the transfers,” Mullei added.

“While mobile money transfer rates are low, they quickly add up when volumes are large and it is hard to continue to pass on these costs to the client.”

According to experts, banks are also plotting a coup on mobile money transfer such as M-Pesa from Safaricom and Airtel Money.

Kimson Kimathi blogger and information security evangelist has previously told ITWeb Africa that the new chip-and-PIN technology being rolled out in Kenyan banks could see more innovation and applications to displace the role of mobile money transfers in banking circles.

“The future of mobile money transfer will look follow the same track as ISP's between 2000 -2010 and we will see more and more avenues to transfer money if the regulators open the space up to multiple players. What will happen is that general transfer rates will drop in the midterm as services jostle for clients,” Mullei concluded.