{"id":679,"date":"2020-04-08T16:25:01","date_gmt":"2020-04-08T14:25:01","guid":{"rendered":"https:\/\/www.jongore.com\/blog\/?p=679"},"modified":"2020-04-08T16:25:01","modified_gmt":"2020-04-08T14:25:01","slug":"network-effects-platforms-and-payments","status":"publish","type":"post","link":"https:\/\/www.jongore.com\/blog\/uncategorized\/network-effects-platforms-and-payments\/","title":{"rendered":"Network Effects, Platforms, and Payments"},"content":{"rendered":"\n<p>Today a report came out that M-Pesa processed 99.6% of the value of <a href=\"https:\/\/kenyanwallstreet.com\/m-pesa-commands-99-6-percent-of-value-of-mobile-money-deposits\/?__s=zcywgutzrpjycdwr3kkc\">mobile money deposits in Kenya.  <\/a>This should raise eyebrows for a couple reasons.  <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>M-Pesa processes about $38.5 billion a year, or almost half the Kenyan GDP for the year. <\/li><li>M-Pesa is wholly owned by a private company &#8211; Safaricom.<\/li><\/ul>\n\n\n\n<p>I don&#8217;t know many businesses that are as effective monopolies as M-Pesa.  M-Pesa first took off in Kenya during the 2007-2008 election crisis.  The violence on the streets prevented many people from leaving home, and as a result, people turned to a digital wallet and payment platform for transactions.  It was often too dangerous to get to a bank, but your local agent was likely safer.  People didn&#8217;t have to travel as far to get money, and they could instantly send money to people who couldn&#8217;t leave their homes at all.  After that, M-Pesa continued it&#8217;s extraordinary growth in large part thanks to the late Bob Collymore&#8217;s excellent vision and domineering strategy.  <\/p>\n\n\n\n<p>M-Pesa also leveraged the network effects that exist as part of a payment platform.  As more users joined the service, it became more appealing for other users to join, and then businesses when M-Pesa launched their pay merchant features.  <\/p>\n\n\n\n<p> M-Pesa also made it extraordinarily difficult for their competitors to gain any sort of value from the growing ecosystem.  They lobbied hard against payment neutrality, or inter-operable agents.  They bullied agents who wanted to operate other payment networks, and they bullied startups too.  I&#8217;ve on and off in Kenya over the last ten years, and saw how ruthless they actually can be.  <\/p>\n\n\n\n<p>Now, while that&#8217;s just good business and I can&#8217;t say I&#8217;m not concerned that a private business processes over 99.6% of all mobile money transactions in Kenya.  That&#8217;s overwhelming market power.  If they wanted to begin extracting rents, or limiting innovation, there&#8217;s nothing anyone can do.  It&#8217;s M-Pesa&#8217;s way, or the highway.  That should scare startups, the government, and private citizens in Kenya.  It scares me. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Today a report came out that M-Pesa processed 99.6% of the value of mobile money deposits in Kenya. This should raise eyebrows for a couple reasons. M-Pesa processes about $38.5 billion a year, or almost half the Kenyan GDP for the year. M-Pesa is wholly owned by a private company &#8211; Safaricom. I don&#8217;t know [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-679","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/comments?post=679"}],"version-history":[{"count":1,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/679\/revisions"}],"predecessor-version":[{"id":680,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/679\/revisions\/680"}],"wp:attachment":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/media?parent=679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/categories?post=679"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/tags?post=679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}