Should M-Pesa prioritize expanding merchant partnerships or enhancing peer-to-peer transfers?

Introduction

The key trade-off for M-Pesa lies in prioritizing merchant partnerships expansion versus enhancing peer-to-peer transfers. This decision will significantly impact M-Pesa's growth strategy and user experience. I'll analyze this trade-off by examining the current product landscape, potential impacts, key metrics, and experimental approaches to inform a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm assuming M-Pesa is looking to accelerate growth. Is this driven by increased competition or market saturation in peer-to-peer transfers?

Why it matters: Helps understand the urgency and strategic context Expected answer: Increased competition from new fintech entrants Impact on approach: Would prioritize differentiation and user retention strategies

• Business Context: What's the current revenue split between merchant transactions and P2P transfers?

Why it matters: Identifies potential for revenue growth in each area Expected answer: 60% P2P, 40% merchant transactions Impact on approach: Would influence which area to prioritize for immediate revenue impact

• User Impact: Are we seeing any significant differences in user retention between those who primarily use P2P versus those who frequently engage with merchants?

Why it matters: Helps identify which feature set might drive long-term user engagement Expected answer: Merchant-engaged users have 20% higher retention Impact on approach: Would suggest focusing on merchant partnerships for user stickiness

• Technical: Are there any major technical limitations or upcoming infrastructure changes that could affect our ability to scale either merchant partnerships or P2P transfers?

Why it matters: Identifies potential bottlenecks or opportunities in implementation Expected answer: New API framework launching next quarter could streamline merchant onboarding Impact on approach: Might favor merchant expansion if it aligns with technical roadmap

• Resource: What's our current team capacity for onboarding new merchants versus developing enhanced P2P features?

Why it matters: Determines feasibility of execution for each option Expected answer: Merchant onboarding team at 70% capacity, P2P dev team fully allocated Impact on approach: Could influence short-term focus based on available resources