hack ·a·thon [hak-uh-thon] noun: an event when programmers meet to do collaborative programming – Wikipedia

The word ‘hack’ means different things to different people.  To programmers, it means overcoming system limitations in order to solve a pain point.  To non-programmers, ‘hack’ tends to have negative, often frightening connotations.  With the PesaPi Hackathon in full swing at the time of writing, the intent of this post is to 1) describe why the PesaPi Hackathon is, not only benign, but good news for Safaricom, and 2) explain how PesaPi is good for Kenya.  

Let’s start with some context.  According to its README file on Github, “PesaPi is an unofficial open source API for (Pay Bill) commercial accounts, released under the BSD (lite) license” [1].  PesaPi uses a process called ‘screen scraping’ in order to extract transaction data from the M-Pesa Pay Bill web interface.  Once extracted, PesaPi transforms and exposes that data for consumption by another program.  More simply, PesaPi enables M-Pesa Pay Bill accounts to communicate with other systems.  

Michael Pederson of Plus People doing a PesaPi code walkthrough

Why the PesaPi Hackathon is good news for Safaricom

At its core PesaPi is about making it easier for companies to integrate with M-Pesa.  Currently, companies that accept payments via M-Pesa Pay Bill (see the full list here) have to either 1) build expensive, one-off integrations, or 2) manually reconcile payments with their back-office systems.  In practice, the former is too expensive and the latter is too cumbersome, which is one of the reasons only a handful of companies are registered for M-Pesa Pay Bill (there are approximately 29,000 M-Pesa users per M-Pesa Pay Bill Partner).  PesaPi lowers these barriers to entry and encourages additional companies to accept M-Pesa.

More companies accepting M-Pesa means higher transaction volume, which translates to higher average revenue per user (ARPU) for Safaricom.  In other words, even though Safaricom M-Pesa has over 95% of the mobile money pie today, PesaPi will help make that pie bigger tomorrow.  Just think about your own spending patterns to put the growth potential in context: how many times a day do you give money to friends and family vs. how many times do you give money to merchants?  

In addition to increasing the size of the mobile money pie, PesaPi will also help Safaricom M-Pesa retain its large slice of that pie.  PayPal’s decision to launch an open API, PayPal X, is a good reference point.  PayPal launched in 1998 and was the undisputed leader of person-to-person payments for eight years.  After the launch of Google Checkout in 2006 and Amazon Payments in 2007, PayPal knew it had to innovate in order to stay on top.  In the 2009 press release announcing the launch of PayPal X, Scott Thompson, the President of PayPal, said the following:

“Until now, developer innovation has been stifled by the barriers payment systems impose.  With an open platform, we’re solving fundamental challenges people face when trying to pay or get paid and giving people the tools to create new business models for their innovations.” 

Until Vodafone releases an official API, PesaPi is Safaricom’s PayPal X.  In turn, Airtel Money, Essar yuCash, Eazzy 24/7, Tangaza, etc. are the Google Checkouts and Amazon Payments that are trying to cut into Safaricom’s market share.   

Setting up Pay Bill Simulators to mimic M-Pesa transactions  

What PesaPi means for Kenya(ns)

M-Pesa is like any other network: its utility increases commensurate with its user base.  As more businesses accept M-Pesa, consumers will be able to rely on cash less and less, which results in increased convenience, efficiency, and security.  At a macro level, less cash means increased insight into how the Kenyan economy functions (thanks to what our friend Matt Krueger calls “Smart Money”).   

More fundamentally, PesaPi will enable third party developers to build a robust ecosystem around what The Gates Foundation calls M-Pesa’s “ubiquitous transactional rails” [2].  

Message to Safaricom

Over 20 programmers attended the PesaPi Hackathon.  They came because of intellectual curiosity, because they want to contribute to the M-Pesa revolution, and because they work with companies that need PesaPi.  They are among M-Pesa’s most valuable allies and champions.  And they come in peace :-) 

Ready for a long night of code 

- Ben Lyon, VP of Business Development (@bmlyon) 

You might also like:

• The Word “Hacker” - by Paul Graham, founder of Y Combinator 
• The Meaning of Open - by Jonathan Rosenberg, former Senior VP of Google 
• Kerckhoffs’s Principle - why open systems are more secure in the long run
• PayPal X: Prepare for the new PayPal - by Ben Parr of Mashable