M-pesa Sub Agency Business Plan
M-pesa Sub Agency Business Plan
M-pesa Sub Agency Business Plan Overview
This is a M-pesa Sub Agency Business Plan to the standard the M-Pesa Sub Agent Business.
How M–pesa Agency / Sub Agency Works
Basically an M-pesa agent receives deposits from customers, lets customer’s withdrawal cash and registers new customers. Presently there are 3 levels of M-pesa agents:
1. Super Agents
These are largely banks and big retailers who are able to maintain a float of above 500,000 .
2. Agents / Aggregators
This is the principal agent who operates a number of tills. He is also the aggregator who recruits sub agents. Officially he is supposed to recruit subagents and help them meet conditions of operation as laid out by Safaricom. To become this kind of aggregator Agent one has to apply directly to Safaricom.
3. Sub Agents
A sub agent operates under the agent. (Think of sub agents as the numerous small M-pesa outlets everywhere) The agent is supposed to recruit the sub agent. Officially the way it should work is as follows;
What Actually Happens
The above looks pretty good but it is the ideal and not the reality of what happens. In real sense many of the Agents rather than aggregating the sub agent and registering him directly with Safaricom they treat him as their own. In this case the Agents receive all the commissions and decide on what ratio to share with the subagent it could be anything like 70/30 or 75/25 and sometimes 60/40 or whatever formula they agree on.
The Agents insists that the sub agent have a float of Ksh.100, 000 and the sub agent has no control of this float as it is managed by the Agent. If an agent is closed also the sub agents float money is locked in. They also charge goodwill in order to give the sub agent a till. The goodwill depends on the dealer. He may consider the location and possible earning in setting the goodwill. The range is Ksh.20, 000 – Ksh.100, 000 with most averaging Ksh.50, 000. So therefore to become a sub agent one approaches an agent and gets into some form of agreement with him.
An alternative to getting a till directly from an agent is to ‘purchase’ one from a sub agent who wishes to quit the business. If clueless where to get a till/line look in newspaper classifieds or online classifieds. Alternatively just approach a Safaricom dealer. When you purchase a till from sub agent who quitting the business make sure it’s transferred to your name and you sign a contract with the dealer. Also find out about the location and exactly why the person is closing shop.
Officially when an agent recruits a sub agent he is supposed to invite a Safaricom M-pesa supervisor to come and approve or disapprove the sub agency. Largely the supervisor is supposed to consider the location of the M-pesa shop vis a vis other shops in the neighborhood and the population of the area. The idea is to have only the right number of shops serving a particular region so as to maximize commissions and reach. This rule is more often than not disregarded.
Another factor to consider is the agreement between you and the super agent as regards the commissions. If you are not aggregated your commissions will be paid through the agent who takes a percentage of the commissions. This percentage varies from agent to agent but lies between 20 % and 40 %. For instance in the recommended 80:20 formula you keep 80% of the commissions while the Agent takes 20%. Make sure to negotiate the best rates and also a definite date by which the commissions should be paid. Some dealers are good at arm twisting. Essentially this should be during the first week of the month (By 5th or so). Also try negotiating with the agents so that you get a statement every month which shows the transactions and the commissions earned.
Download M-pesa Sub Agency Business Plan / guide here