Kenya: The Post and the Cash Merchant Model in an Advanced Mobile Money Environment

In the last few years, the Postal Corporation of Kenya (PCK) has been confronted with decreasing mail volumes and an increased need for sustainability, given its changed status from public administration to state-owned corporation. It has had to diversify its service offering, in particular by providing instant domestic remittances and becoming a cash merchant for third parties. To do this, PCK has opted for a model based on multiple partnerships, where the Post office acts as a cash merchant for a vast number of diverse stakeholders. The case of Kenya is interesting since it represents the epitome of the multi-partnership model. Indeed, the PCK has signed 320 different partner agreements through which it offers cash-in/cash-out services.

This case study shows that a Post can diversify its revenues by becoming a cash merchant. There are, however, some pitfalls to avoid if this endeavour is to be successful. In particular, the cash merchant model should not be seen as a response to a failing core business, but rather as a revenue source additional to a strong core business.