Just as the M-PESA mobile money service hits 5 million registered clients in Kenya, it’s encountering a wave of attention about its regulatory status. The tide of critique has been rising, as we highlighted last month. The rub is with Safaricom’s regulatory status. Some say M-PESA’s lack of status as a bank puts customer funds are at risk. This recent article from the East African Standard concludes M-PESA “could be a disaster waiting to happen.” Kenya’s Finance Minister ordered an audit of M-PESA and is on record with the Standard saying, “I am not sure M-PESA will end well. We want to protect wananchi [citizens] from the sharks who want to make money from the misfortune of others.”

The Kenyan media contains alternate voices that are much more sanguine about M-PESA’s safety. They highlight that M-PESA is a money transfer service, rather than a bank, which implies it should be regulated differently. This article from the Business Daily recounts the widespread belief that much of the pressure being piled on Kenyan regulators originates from a banking sector which sees M-PESA as encroaching on the financial service space. As John Walbengo, an IT Lecturer at the Multimedia University College of Kenya tells the Business Daily: “The chief suspects… would obviously be the 48 commercial banks whose total and national customer base is only one-tenth of the four million M-PESA customers that Safaricom controls.”

The Business Daily also cited CGAP. The paper reported – incorrectly – the numbers of daily transactions for M-PESA and Equity Bank, Kenya’s largest commercial bank, also with a track record of reaching many ordinary Kenyans. The right numbers, as we released in December at a mobile banking roundtable, are M-PESA, 160,000 P2P transactions per day; and Equity 118,061 m-banking transactions per day.