E-commerce By I & M Bank

I just got off the phone with Mr. Reddy from I & M Bank. A real gentleman. He had called in response from yesterday’s article: I & M Bank got it wrong, to inform me of some erroneous information in that post.

First off, the very fact that I & M Bank responded is impressive. Not many organisations in our country monitor – and respond to – what is said about them online. least of all banks! I & M Bank got that very right, kudos to them.

Mr Reddy made some valid points in defense of I & M. First, we have to understand that PayPal and similar other services are not banks. They operate under different legal environments from banks. Banks like I & M operate in a more controlled environment, and have to live by the rules set forth by the Central Bank of Kenya (in I & M’s case). Naturally, this will make comparing PayPal to I & M a little like comparing apples to oranges.

What does I & M Bank Offer?
Through I & M, you can set up a very tightly integrated e-commerce solution that is tied directly to your bank account at I & M Bank. This means that whenever someone pays you, it goes into your account immediately.

Setting up the e-commerce platform will cost you, however:

  1. Small organisations – charges are $500 and this includes extensive support, even “hand holding” to ensure that you set up everything just right.
  2. Large organisations – charges start from $500 going upwards depending on the features and how much work needs to be done.

According to Mr. Reddy, the bank will not charge transaction (commission) fees. Instead they will charge $50 to $100 monthly depending on your agreement with the bank.

I still think that I & M’s charges are on the higher end of things but I must say that I do believe there are advantages to using their service. If I was heading a small to large company, I would think very seriously about using I & M instead of services like PayPal. Why?

  • No transaction fees. As long as you are making enough to cover the monthly charges, it is beneficial not to have a commission of your sales taken by the payment processor.
  • The money goes directly into your bank account.

When you use services like PayPal, the money that you make is not held in Kenya until the day that you choose to withdraw to Kenya. I believe that if, instead, we could all use a service that is fully local, the country would benefit in general. I & M is one such local solution. Their service may be a tiny bit pricey to set up, but if your company can afford it, go for it – they sound like they know what they are doing.

I & M Bank Got It Wrong

Yesterday I cam to learn that it is possible to receive money online in Kenya through I & M Bank. Their e-commerce processing solution is indeed impressive – you can have your website or shopping cart fully integrated with your bank account at I & M Bank.

However, I & M Bank’s set up fees start from around Kshs 160,000 (USD 2,000!!) $500 and Kshs 20,000 $50 – $100 a month plus a percentage of your transactions. A Mr. Reddy from I & M Bank confirmed these figures.

Let’s go back in time to the day that the wildly popular PayPal launched its services. On opening day, PayPal:

  1. Allowed any eBay seller to process payments online
  2. Was free to start using
  3. Had very minimal charges

That kind of strategy got PayPal to where it is today, an internet money processing behemoth. And they have made hundreds of millions of dollars to date.

I & M Bank does not get it! You cannot charge such outrageous sums of money and hope to grow your service beyond a handful of customers. I & M Bank’s service was launched early this year. It was launched at a time when their service was one of the only ones that worked. If their pricing was sensible they may have gotten more customers than they could have handled. They would also have entrenched their position and made it harder for any other payment processor to succeed in Kenya. But they did not.

Now PayPal works in Kenya and is rumored to be working with Equity for full integration early next year. What will happen to I & M bank then? Their short foray into e-commerce may come to a brutal end.

Update: E-commerce By I & M Bank.

How to use Paypal in Kenya – Part 1

Update: PayPal now works in Kenya! You can also now withdraw from PayPal through Babawatoto or LibertyReserve.


I’ve always been sceptical about online trading. I’m slightly spooked by the idea of giving my bank account and details to some random guy behind some computer somewhere. I blame it on The Net, a  movie from the early 90s. It starred Sandra Bullock [LOVE her] and it was awesome, but very, very scary. Of course it was based on those old DOS computers with the green text and the black screens, but it’s still pretty scary.

Plus, of course, I don’t own a credit card.

But as I build my business, I find that I do more work online. Most of my clients prefer Paypal, because it’s safe and reliable, even though they charge a small commission on transactions. I got myself a Paypal account some years ago using my mother’s credit card [thanks mum!] and I’ve been using it to buy stuff related to my business.

Recently, I got a client who insisted I open a Paypal account in my own name, because it was easier for him to pay me that way. And no, I didn’t tell him to ask my mother. I opened the account, but I couldn’t receive money through it, because the service isn’t offered in Kenya. Paypal.ke lets me buy, not sell.

I tried to attach my debit card onto the account, and as part of the verification process, the Paypal people charged $2 to my bank. It’s a safety measure to prove that it’s my card. The transaction would appear on my card statement with a secret four-digit code. I would take the code and enter it into my Paypal account to prove the card was mine. The $2 would then be refunded.

Oddly, when my statement came, what I got was a six-digit code, and when I tried to enter it into my Paypal, the card was blocked. I first tried to type in all six figures, but of course, it only took the first four, and pulled an ‘access denied’. I then tried the last four digits with the same result, and by the time I tried a random combination, I could almost hear the buzzers ringing and the metal gate clanging shut. After that incident, any time I try to use the card to pay for anything, even if it’s on a totally separate site, Paypal politely refuses.

Kelvin suggested I try Moneybookers, and it looked promising. I went through the same process, opened an account, attached my debit card, allowed them to charge my account for verification purposes. This time, the process was slightly different. Moneybookers was to charge my account with between $1 and $3. I would check my card statement, find out the exact amount, and fill in that information to prove myself. Unfortunately, Moneybookers can’t refund.

The trouble is … the amount on my statement was in Kenya Shillings. And with the exchange rate moving constantly, I couldn’t verify the amount to specific cents. Le sigh.

An associate told me about a system KCB has with Paypal, so I checked it out. Apparently, KCB has a debit card specifically for use online! How cool is that?

What happens is you open a prepaid card account with KCB. You don’t have to be a member – I personally bank with Barclays and NBK, and I was worried about joining a third bank. So I was relieved to hear I didn’t need a regular KCB account.

The card account takes Ksh 1000 to open, and all you need is a copy of your ID and a passport photo. The guys have a digital camera on the ready, just in case.

As far as I know, the account has no minimum balance and no service levies. You can receive money online once you attach the KCB card to your Paypal account, and you can withdraw the funds from any ATM at a charge of Ksh 20. You can top up the card at any KCB branch; you simply deposit the money at the counter using the 16 digit number on your card. It’s kind of like M-Pesa, with shorter banking hours.

Of course, you still need to have a Paypal account in the first place. You can get one at www.paypal.com, which redirects you to www.paypal.com/ke. It’s a pretty straightforward process, and I’ll be writing more on how succecsful the KCB card actually is. Specifically, I’m curious to see about verification.

I opened my card account a few days ago and haven’t received or used it yet, but it seems like a good deal. I don’t know if you can use it with agents other than Paypal, but you probably won’t need to; Paypal is already the Safaricom of the online world. Hopefully, its service is better.

The second step in working online [where Step 1 is deciding to work online] is probably getting a KCB-Paypal debit card. How else will you get paid?

Crystal Ading’ is a professional author, editor, rock lover and mother. Her work is available through www.threeceebee.com.

Family Bank Goodies

In partnership with KDN, Family Bank is set to offer free Wifi within a radius of one kilometer of each of the bank’s branches. The bank has quite a number of branches. 😀

So now you can add Family Bank to your list of where you can get Wifi in Nairobi. :p Apart from increasing it’s brand awareness, how else will Family Bank benefit from this? I’m not sure…However, you and I shall benefit immensely!

More to that, the bank shall also be offering financing to those who are interested in setting up internet and data related businesses. Are you an entrepreneur? Looking for financing?

Banks and Bank Loans in Kenya

This article is written by Bonface Kamau, who is going to be writing on banking right here on Like Chapaa. Is there anything that you’d like to know about banking in Kenya? Bonface is the man, just contact us with your questions.

Money makes the world go round. Based on this principle, banks have seized the opportunity to bridge the gap between the financially surplus and the financially deficit through loans and overdrafts (bank credits). Since banks are actually businesses with a profit motive, they charge interest on the credit, calculated on a compound interest basis.

This interest that banks charge must cover their bad debts and non-performing loans – referred to as the interest exposure – which is calculated by professionals before banks come up with a standard interest rate.

Commercial banks’ having defied a directive to reduce their interest rates by the Central Bank of Kenya has led to customers being offered loans at very uncompetitive terms. The only banks offering competitive interest rates on their loans are K.C.B and Southern Credit Bank (which unfortunately operates in Nairobi only). However, the Central Bank of Kenya issues directive to banks to subsidise their interest rates on loans meant for nation building like loans to start a business and currently to farmers which is at about 15% p.a as compared to 17-21% offered on normal loan terms.

It is worth noting the tremendous growth in our non-banking financial institutions which offer loans at a much lower interest rate. However, any transaction entered into with these institutions such as a loan agreement, should be weighed heavily as this non-banking financial institutions are not regulated and/or scrutinised thoroughly as banks. This leads to questions being raised about their integrity and accountability. One may consider the youth and women’s fund if you want do not meet the requirements asked by the banks.

This should not discourage you, however. If you have a viable idea and a burning desire to transform that idea into a lucrative business, then go for financing. Business owners and entrepreneurs are known as risk takers – just bite the bullet and go for what you think works for you.

As we review the merits of bank loans, acquiring one should not lead one from a bad situation to a worse one. Ask your banker all the relevant questions not forgetting to inquire about any hidden charges. Let the banking hall be the birth place for success.

The KCB Mobile Wallet

Just the other day, I was thinking to myself: do I really have to go to the bank? I really dislike going to the bank, especially inefficient banks like mine. And that’s, really, been everyone’s complaint against KCB over the years: it is very inefficient. Or it was.

In a surprisingly innovative move, KCB recently announced that they will be launching the “mobile wallet” next year. While Zain’s ZAP is posing a commendable challenge to MPESA, I think the mobile wallet is what will really challenge MPESA. It looks to be a game-changing service for at least the following reasons:

  • KCB is a large bank, by all means. This means it has considerable leverage and, possibly, experience to make this product a smashing success.
  • The mobile wallet will not only work for KCB account holders, it will work for anyone who has a mobile phone in Kenya. Thus, the potential reach is quite large.
  • KCB are going to build an interface to the already popular MPESA for the mobile wallet. This is a notable case of cooperation that may well fasttracks the rise of the mobile wallet’s popularity.

I am very much looking forward to the mobile wallet. One impact of MPESA has been making ‘banking’ services available to all and sundry. I am excited to think of how many more people can be reached by the mobile wallet. Good job, KCB.

Six of the Best Banks For Startups In Kenya

So last week we wrote here about our frustrations in finding a good bank for a young startup business – we had walked in and out of banks for hours and non struck us as particularly attractive for our young business. Following the article on Like Chapaa, we received a lot of emails and other feedback from a whole lot of people giving us advice on which banks would be suitable for startups in Kenya.

Are you a business owner? Are you planning on being one? For your banking needs, try one of these:

  1. Equity Bank. Evans says, “Try Equity bank, I have a business Account with them and its good and even accessing credits is easy.They have helped in the growth of my business,so I m a proud member of the bank. All the best as you start your business.”
  2. Chase Bank – Maingi says, “They are really flexible in terms of handling transactions for instance I comfortably transact without ID…in a nut shell they try to know their customers and treat them as such. Also there are good in Forex. Try them.”
  3. Fina Bank
  4. Bank of Africa
  5. Eco bank
  6. NIC

The banks in the above list are ranked according to the number of recommendations received for each. I hope you will find this useful.

All in all, the picture of banking in Kenya that I got from this experience is not good. At all. Our banks seem to be interested only in making money off their customers and they are very poor at supporting new businesses.

That said, I shall close this post with the best piece of advise that I got. Many thanks to the author, Sagongonyi. Thanks also go to everyone else who helped.

“Most banks will require a six months statement (minimum) for any meaningful assistance. It also depends on the nature of business you would like to engage in. For example if it is a simple transaction like you have an order to supply some items to an organization, Equity can finace you and you agree on how to share the profit.

There are other institutions like GroFin that can finance start up businesses but with a well presented business proposal. They will also require you to contribute a percentage of the initial capital outlay. They will also require you to personally manage your business and you will also share profits with them. They have assisted quite a number of my friends who import second hand Prime Movers. They are in Upper Hill CIC Plaza.

NIC are also good but they require you to have some experience in your business, even 3 months can be ok. Their systems are very good and you can get money in two weeks. They are very clear on what they want and they are very straight forward. They have financed my business for a period of three years now and i am not regretting. No bank can give you 100% financing for a start-up business; better start small and grow it.”