M-Pesa vs In-App-Purchases providers Google and Apple
What do you do in a market where the most convenient payment method isn’t optimized for your business model? Do you choose customer convenience over commercial viability? That’s my current dilemma; whether or not to support M-Pesa as payment method in a subscription SaaS or restricting it to platform provided In-App-Purchases(Pay with Apple or Google).
I’m still super early in running this experiment and unfortunately it’s going to take a bit of time to determine what makes the most sense. The thing that makes this decision complicated is it’s a priorities question. It’s asking whether I want to prioritize the customer or the business. Both sides are justified but a decision has to be made.
M-Pesa drives conversions. It’s the defacto payment method in Kenya, no other option compares. Payments and M-Pesa are synonymous as are Colgate and toothpaste. But the caveat is that the platform doesn’t allow for automatic subscriptions so customers have to actively commit to your product every month.
IAPs on the other hand are automated. Customer commits once at the beginning of their subscription and subscription renews automatically.
The former favors the customer from a convenience standpoint while the latter the business from a sales perspective as subscription business work off of repeat purchases so IAP guarantees that better.
Further into the business dilemma is that commitment to MPesa means higher per transaction pricing. We’re forced to have to make profit on each individual transaction since we must assume the likelihood of a repeat purchase is minimal or too far between (part of what this experiment will determine)
There are a lot of layers to this problem and multiple ways to come at it e.g. micro payments, tokens and a bunch others in between that I’m also exploring separately.
The point of this A/B test however, is to evaluate assumption that direct MPesa support while convenient and having high conversion, doesn’t make business sense for a subscription model. Stick around and find out.