Safaricom has revoked its API access previously granted to PrivPay, a fintech startup in Kenya that allowed customers to make M-PESA transactions without revealing their personal details.
According to sources, Safaricom cited policy violations as the major reason for its action against the Kenyan startup.
It stated that the fintech company was using users’ names and phone numbers shared in transactions for marketing despite promises that it would guarantee users’ privacy.
Safaricom also faulted PrivPay, which shut down in May 2023, for incorporating a third party, Daraja—M-PESA’s free payment APIs—into its operations—a business model that Safaricom has said is not in tandem with its operational policies. This led to Safaricom suspending the fintech company’s pay bill account—a cash collection number built on M-PESA that allowed the startup to process transactions.
“Your business model is not permitted by Safaricom,” Safaricom reportedly wrote in a letter to PrivPay in May 2023.
This, however, comes after PrivPay claimed that it held talks with Safaricom about its business model and got the company’s buy-in before launch, adding that the telco backtracked after PrivPay began attracting media attention.
While Safaricom did not respond to a request for comments, the telco reportedly said PrivPay—which claimed to have 30,000 users—contravened Kenya’s Anti-Money Laundering Safaricom and asked that it obtain a payment service provider (PSP) licence from the Central Bank of Kenya (CBK). Obtaining the payment licence takes up to six months.
“PrivPay keeps a record of every transaction and ensures that the manner in which the records are collected and stored for at least seven years can pick out any suspicious patterns,” PrivPay said in a response to Safaricom. However, the telecom inssists that only a letter of no objection from the Central Bank of Kenya would suffice in the absence of a licence.
“We did not explore a PSP licence at the time due to the resources required. Also, it was going to take time,” a former PrivPay executive reportedly told newsmen.
