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PrivPay Shutdown after Safaricom Cut its Access to M-PESA APIs
Safaricom has shut down its API access previously granted to PrivPay. This was due to several violations of compliance set in place by the organization.
Safaricom Shutdown PrivPay
PrivPay is a fintech startup in Kenya that allows customers to make M-PESA transactions without revealing their personal details.
Its unique arrangement made it well accepted amongst tech-savvy consumers who were wary of data breaches and unsolicited marketing.
However, the startup’s business model clashed with Safaricom’s regulatory obligations and industry standards.
PrivPay Faulted For Data Security Issues
According to Safaricom, the startup was using users’ names and phone numbers shared in transactions for marketing despite promises that it would guarantee users’ privacy.
It also faulted the company for integrating a third party, Daraja, M-PESA’s free payment APIs, into its processes.
In response, PrivPay claimed it held talks with Safaricom about its business model and got the company’s approval before launch.
Also Read: Safaricom Leads Kenya’s Evolving 5G Landscape
The startup also highlighted that the telco went back in its approval after it began attracting media attention.
Safaricom wrote to PrivPay in May 2023 in a letter, saying, “Your business model is not permitted by Safaricom.”
Safaricom Decision Based On Ensuring Financial Integrity
The telco claimed that its decision to cut off the API access was a decisive move to protect its platform and adhere to regulatory stipulations.
It also emphasized that it had asked PrivPay to get a payment service provider (PSP) license from the Central Bank of Kenya (CBK), which was not adhered to.
A former PrivPay executive said, “We did not explore a PSP licence at the time due to the resources required. Also, it was going to take time.”
Safaricom’s decision highlights the importance of balancing between fostering innovation and ensuring financial integrity.
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