67 Comments

1. June 18th, 2008 at 9:57 am, Andrew Ngwena ()

   Great article. I have been to Kenya and seen mpesa in action. I know that it operates in some very rural locations. I am wondering how agents who are very rural, in locations where they cant even ride their bike, manage to get float?

2. June 18th, 2008 at 10:47 am, Oscar ()

   The thing I’m wondering is that why have other mobile phone operators not followed suit?

   http://blogs.spacelinx.com

3. June 18th, 2008 at 7:26 pm, Cash4U « Michael Sieburg ()

   [...] under: Development, Sub Saharan Africa, Technology Another mobile technology story- M-PESA is taking off in Kenya. M-PESA is a mobile technology service that allows subscribers to make money transfers. It [...]

4. June 19th, 2008 at 7:48 am, Olga Morawczynski ()

   Andrew, those agents who cannot access banks find other ways to manage their float. For example, I met agents who only gave out money when someone had made a deposit. Because the deposits in the rural are few, the withdrawals this agent was able to process were also few. Generally speaking, the closer the agent is to the bank, the easier it is for them to operate.

5. June 25th, 2008 at 12:27 am, Karen Sidler ()

   Has this thing done as well in other countries?

6. July 26th, 2008 at 6:27 am, Mustafa Rasheed - Mpay Pakistan ()

   Good Article! Yes, the cash availability is a challenge and I think there can be ways to mitigate the liquidity risk. Firstly, the existing data of area-wise cash withdrawals can allow the bank to forecast (keeping in view % growth in transactions)the expected demand for cash. The answers to this problem would lie in the local demographic structure. I think the Bank needs to play a key role in channeling the cash to such locations in a cost effective way. perhaps the number of existing subscribers are enough critical mass to justify such an exercise.

7. July 30th, 2008 at 10:55 am, Digital Currency and Mobile Payments Offer Benefits For Millions of User : DGC Blog ()

   [...] article is from the CGAP web site. They are a “..the leading independent resource for objective information, expert opinion, [...]

8. July 31st, 2008 at 3:29 am, M-PESA, A Roaring Success « Alternative marketing thinking ()

   [...] from the University of Edinburgh who spent 9 months studying customer adoption and usage in Kenya made some interesting observations on the Safaricom run venture. She sights one of the main reasons for M-Pesa’s popularity as the [...]

9. August 1st, 2008 at 4:35 pm, Gates Foundation gets into Microsavings « The Social Ecosystem ()

   [...] is more important when you are making less than $4 a day. In the words of a Kenyan customer in an article on M-Pesa “It is cheaper to [...]

10. August 18th, 2008 at 12:40 pm, Kate ()

    The best rural solution will ultimately be cashless. If the rural agent who needs to distribute funds can do so directly - or better yet, if funds can go directly to the mobile phone for example, then no need to travel distances to bank for cash. Pay the shopkeepers for goods with transfers… etc. With mobile penetration as high and growing ever so rapidly, this will be more feasible each day.

11. August 26th, 2008 at 1:51 am, Jayesh Sharma ()

    Hi Jim,
    Has there been a study by CGAP that can quantify this initiative in terms for IFI ( Index of Financial Inclusion). Can we reasonably state that Kenya has moved up the Index of FI because of the increased reach brought about by the service or increase in number of consumer storing value per 1000 persons. It would help to compare those numbers prior to m-PESA and post M-pesa. Please direct me to any such existing research already done.
    Best Regards
    Jayesh Sharma

12. September 2nd, 2008 at 3:01 am, Tonny Omwansa ()

    The latest development is that Safaricom, the company behind M-Pesa will include a menu to allow customers to purchase items in stores. Merchants will have M-Pesa merchant accounts. Its also now possible to have the phone communicate with an ATM and money be withdrawn from the ATM as opposed to an agent. meaning the ATM becomes the Agent. This could partly solve the float money issues. Many things are spinning off this: M-Commerce, cross boarder transactions etc. There are challenges in regulation, but the innovations have really gone fast.

    Rgds,
    Tonny Omwansa
    Nairobi, Kenya

13. September 16th, 2008 at 2:55 am, Who is using mobile phones for development « talk-share-learn ()

    [...] is a very popular service offered in Kenya to send money in an instant transaction via SMS. Every subscriber while depositing [...]

14. September 27th, 2008 at 4:29 am, Mark Smith ()

    They have also partnered with Paynet, a company which manages ATM machines in Kenya. These ATM machines are now acting as 24 hour agents. Customers can go there to withdraw money by entering the agent number of the ATM.

15. October 4th, 2008 at 5:31 pm, Rue du Monde » Blog Archive » MPesa ()

    [...] Kenianen kopen een kaart bij Mpesa, waarmee ze hun mobiele telefoon kunnen opladen. Niet met beltegoed, maar als een soort chipknip. [...]

16. October 15th, 2008 at 7:44 am, Jessen opiyo ()

    This is the best thing that has happened to kenyans in a long time,now transfering funds is now really “under your fingertips”

17. October 17th, 2008 at 7:43 am, Amos ()

    M-Pesa service is mostly and widely used in the urban area more than in the rural areas. People have opted to have money in their M-Pesa account rather than in the banks.

    People preffer having money in their phone due to several factors but mostly is due to the ease of carrying liquid cash to for their day to day business. Businessman are paying their bills using M-Pesa.

    For instance a supplier will be paid down payment before supplying and when he make his supplies he will be paid the other payment.

    Theirfore, Mostly M-Pesa have changed the lifestyle of the urban dwellers in terms of cash handling.

    A student at the university of Nairobi receive his up keep money through M-Pesa from the rural area.

    The only time when the their is a transaction in the rural areas is when the parents or the relatives are receiving money from their relatives in the urban areas.

    The bigger percentage of M-Pesa operate inthe urban centre than in the rural areas.

    The latest of M-Pesa is the payment of premiums. They are working with Old Mutual.

    Regards

18. October 19th, 2008 at 3:45 am, Munashe ()

    I think it has become so popular for it provides a very fundamentall service which is very economical and useful to the local people. it saves them money which could otherwise have gone to waste

19. October 24th, 2008 at 4:19 am, Harry ()

    As far as I understand Vodaphone has not extended the application to other countries in Africa. Why is that?

20. October 24th, 2008 at 12:07 pm, Mark Smith ()

    They have extended to Tanzania a few months back. It is just not doing as well there.

21. October 29th, 2008 at 5:55 pm, M-PESA, why it works « Design in Africa ()

    [...] Research done by Olga Morawczynski shows that migrant workers are the early adopters who influence other people to use the service.  [...]

22. November 27th, 2008 at 6:08 am, Andrew Webber ()

    M-PESA will soon have competition with other mobile operators. They will introduce their m-banking products soon. Zain has already announced the launch of zap money, their product. We will see how M-PESA responds.

23. December 1st, 2008 at 5:42 am, kosty ()

    i would like to know whether the possibility of cloning SIM cards is a problem as far as M PESA security is concerned.

24. December 4th, 2008 at 5:52 am, Karen Widley ()

    It would not be worth it to clone SIM cards. The money in the M-PESA account is too small for that effort. Also, you need a PIN to access that cash.

25. December 6th, 2008 at 2:50 am, Eric Kotonya ()

    Kenya is primarily an agro-based economy, with most production still rural based. The real value to rural Kenya will be realised when Safaricom activates M-PESA’s corporate features and allows B2C and B2B transactions.

    There are 2 new options on the M-PESA SIM menu - PAY BILL and BUY GOODS. Does anyone have insights into how Safaricom intends to roll these out?

26. December 9th, 2008 at 5:09 am, Mark Smith ()

    Another exciting development….Vodafone has partnered with Western Union. They are piloting money transfers from the UK to Kenya.

27. December 14th, 2008 at 5:50 am, Eric Kotonya ()

    The Voda-Western Union transfers face one major issue - M-PESA transfers can be done without ever identifying the recipient.

    This can be done by buying a non-registered SIM card in Nairobi, receiving M-PESA and cashing out at an ATM, all without having to produce a name or identification document.

    It will be interesting to see how Vodafone and anti-money laundering authorities resolve this.

28. January 13th, 2009 at 10:17 am, Mark Smith ()

    Looks like M-PESA has registered 5 million customers!

    http://www.bdafrica.com/index.php?option=com_content&task=view&id=12219&Itemid=5812

29. January 28th, 2009 at 3:40 pm, Quick Links - Black Looks ()

    [...] M-Pesa is a phone banking system that has become popular in Kenya especially in rural areas. Since its introduction in March of 2007, the M-PESA application has had great success all over Kenya. There are currently over 2.3 million registered users. Over 18 Billion Ksh had been moved through the system, via person-to-person transfers. [...]

30. February 3rd, 2009 at 12:15 pm, axmed sh ()

    i would like to understand more about m\pesa because nowadays our company starting this form please sent me more about this

31. February 6th, 2009 at 5:42 am, A. Richards ()

    Ther is also some new competition soon coming into the market to challenge M-PESA. Orange and Zain will both launch something soon.

32. February 19th, 2009 at 12:02 pm, Digital war on poverty « IIMB EPGP ()

    [...] the government. That’s a small step towards lower poverty. It has the generated interest from CGAP and Gates foundation, amongst others, and there is a huge likelihood of replicating its success [...]

33. March 4th, 2009 at 1:51 pm, fred ()

    we have an issue with network coverage in some parts of kenya it would be good if network coverage in kenya is improved also in rural areas to ensure that when someone is sent money through m-pesa he or she is able to collect it at the nearest shopping center rather than again travelling for a long distance because of network issue

34. March 28th, 2009 at 5:22 am, timothy ()

    all those i know use mpesa but i would like to understand the challenges of marketing mpesa

35. April 6th, 2009 at 11:32 am, Jennie ()

    I would also be interested to learn more about the marketing challenges- specifically marketing to the “receivers” of funds. I am familiar with marketing efforts to the “senders”- those living in the U.K. and sending money back home. But, how do you market to those living in Kenya to take advantage of this exciting new technology? What types of mediums would help communicate this product to Kenyans?

36. April 11th, 2009 at 11:33 am, datuk ()

    Better if able to send money to non safaricom users. Surely safaricom could not be the sole telco in Kenya, business will ‘boom’.

37. May 17th, 2009 at 11:59 pm, Ngetha ()

    @timothy

    The greatest challenge as far as marketing, I see falls on the agent’s model, while they (Safaricom) actively advertise through various channels, the agents have troubles of float / cash at times.

    Recently Safaricom have partnered with KCB (Kenya Commercial Bank) to allow their agents to get cash from there as well, an addition to the Commercial Bank of Africa.

    @datuk

    While you cant send money to non safaricom users, there are ways around it, seeing that 70% of the market is held by safaricom, there is definitely someone you know on Safaricom, so you can still use it by proxy. Alternatively use Zain’s Zap

38. May 18th, 2009 at 3:07 pm, korir ()

    I did not basically understood all about the bussiness of upesa operate in our rural areas, is it possible to make some one to operate with empesa

39. May 20th, 2009 at 1:34 am, Andrew Ngwena ()

    Will the KCB partnership make cash more available in the rural areas?

40. May 30th, 2009 at 2:38 pm, Day 81: Ars Electronica Symposium Examines Cloud Intelligence | 80+1 - A Journey Around the World ()

    [...] to the cloud. Welcome to new the social ecology of the 21st century. Welcome to mobile banking from a New York taxi cab direct to rural Kenya. Welcome to the wild wondrous web of blogs, [...]

41. June 16th, 2009 at 12:48 pm, Jennifer Johnston ()

    Hi,

    Does anyone know what the M-PESA agents get for doing the transations? Are they paid by Safari com?

42. June 16th, 2009 at 1:00 pm, Jim Rosenberg ()

    Hi Jennifer, try this: http://www.cgap.org/p/site/c/template.rc/1.26.5205/ for more about MPESA’s agents and compensation issues.

43. July 6th, 2009 at 2:04 pm, David Roodman’s Microfinance Open Book Blog » Blog Archive » High-tech Microfinance: The Business Case ()

    [...] Phone banking has done better in Africa. The one break-out success to date is Safaricom’s M-PESA phone banking system in Kenya, which has 6 million customers as of a few months ago. So far [...]

44. July 14th, 2009 at 5:39 pm, Putting people first » What you don’t know about M-PESA ()

    [...] Why has M-PESA become so popular in Kenya? [...]

45. July 29th, 2009 at 4:34 am, What will broadband mean for east Africa? | IT Support Essex ()

    [...] a lot about successful mobile innovation in Kenya and other countries – payment system Mpesa is the most famous example, but there are others too. Would a sudden boost for internet service mean people turned away from [...]

46. August 7th, 2009 at 11:19 pm, Pallab Mitra ()

    Dear Olga,
    This is indeed a great article.
    My take is that MPESA took off in Kenya due to two reasons:
    1. The huge infrastructural gap in the Kenyan banking system to be able to allow the common man in Kenya to safely transfer money home and
    2. Unlike other highgly regulated countries Kenya first saw MPESA and is now seeing regulations.
    I think all services should be first launched and then the regulator should come and put the regulations basis adoption. In other words regulations should be on a risk-propotional basis. Allow regulations to nuture innovation and not curbe innovation. That is the main reason for Kenya’s contribution to Mobile Money.

47. August 30th, 2009 at 3:18 pm, Ken ()

    @datuk
    a little known detail is mpesa has been able to transfer funds to any network in kenya from inception. Anybody can recieve funds but only registered safaricom subscribers can send money.

48. August 31st, 2009 at 9:33 am, Nbura ()

    I am concerned about the security of the agent especially as s/he bikes back to the village with the cash float. With the high rate of kidnapping and robbery in Kenya, how does the agent ensure s/he gets home safely and with all his money intact?

49. September 1st, 2009 at 3:52 am, Andrew ()

    There have been no report of theft. So, you wonder if it doesn’t happen or if it is not reported by Safaricom. That news could really deter some from operating.

50. September 3rd, 2009 at 11:50 am, richard ndivo ()

    The float is virtual money so if someone withdraws the float reduces and if you deposit increases. There is a limit in this virtual float and that usually is the problem especially if you are in an aera where more people withdraw than deposit.

51. September 4th, 2009 at 6:37 pm, kachwanya ()

    The robbery talked about in Kenya is mostly in Urban centers like Nairobi, Mombasa, Kisumu and some section of Kenya like Central Province. In the urban centers the M-Pesa agents don’t experience the same problem of floats and furthermore they take measures not be robbed. While in rural areas there are very few theft cases and basically people know each other and feel comfortable doing business.

52. September 13th, 2009 at 3:13 am, Gregg Marshall ()

    I was glad to see CGAP circulating information on the M-Pesa distribution network again on September 9 (though need to update the article link in the email…it’s moved).

    M-Pesa and Africa are unique. So far these jurisdictions are the only ones where the financial regulator will allow telco agents to act as deposit takers — cash in/out points.

    Regulatory reform and innovation will be necessary for agent networks to take off, as in Kenya, in other parts of the world. If this reform does not happen growth of our industry will be stunted until it does.

53. September 18th, 2009 at 10:41 am, Peter van Dijk ()

    Wow, browsing rapidly through the reactions I think I only saw one person signalling the issue of risk. Two issues stand out that bear substantial risk for the financial services provider, in this case a (grocery) shopkeeper. The shopkeeper/MPesa agent, takes cash money from the clients and distributes it in case of withdrawals. S/He is the one traveling on a bicycle to the bank. All the neighbourhood knows that and the neighbourhood is underdeveloped, including less physical security and public services. Hopefully you do not think that in Africa a Microfinance agent is safe from poor people and criminals that take opportunities for what looks like an easy target. Easier than banks, easier than robbing cars, easier than robbing the mobile banking vehicles of banks/MFIs such as professional agents on motorbikes, in boats, cars, vans. We all have easy access to info that confirm criminality existing in underdeveloped rural areas in Africa (and elsewhere).

    Secondly, the interviewee is primarily a grocery salesman, that’s his business, in which business he and his staff are good and known to be good, reliable. Now nobody buys his groceries anymore it seems (not selling a bag of sugar in a month as he said) and Many Many people wait on his very small and not really well secured shopping floor and veranda….

    All readers hail M-Pesa and the services to the poor. All from developed countries ignore the experience of the Post having small savings corners in grocery stores managed by the shopkeeper and his/her family and all ignore the logic of regulated safekeeping of their own money in licensed and supervised banks (please leave the jokes on the global financial crisis for a moment).

    Absolute poverty and underdeveloped infrastructure is a deadly combination for abuse, fraud and theft. If the first series of these will happen to M-Pesa grocerers please don’t blame Cassandras like me but look in the mirror and ask why you allowed Western companies and donors to continue these activities to buy a saintly image.

    Peter

54. September 25th, 2009 at 6:33 am, Thomas Bendtner ()

    It is important to note some other interesting uses of M-pesa. Kenya’s Electricity generating company has partnered with the service to enable customers to pay electricity bills. Other sectors of the economy have followed suit and it seems that the banking sector is finally realising the challenge that mobile banking is bringing.Water bills are being paid through m-pesa, social security fund remittances, pocket money for the students, contributions towards emergency funds e.g Red Cross has an m-pesa account through which other Kenyans can send money as aid to be disbursed to the beneficiaries.

55. September 28th, 2009 at 11:04 am, Andrew ()

    This is a nice story that puts mobile money and M-PESA in context.

    http://www.economist.com/specialreports/displaystory.cfm?story_id=14483848

    It is part of a much wider mobile revolution.

56. October 1st, 2009 at 2:02 am, diana nyaboke ()

    m-pesa,being one of the mostly used money transfers in kenya,acts as a social overhed cost to most of the underinvested sectors of the economy,now the challenge lies on what socio-economic effects it brings,check on the risk-trade off factor for instance,
    thanks to the enrepreneurs,we have more empoyment opportunities being created in the economy cetris paribus

57. October 1st, 2009 at 2:08 am, diana nyaboke ()

    as kenya gears its wheels towards development,these are the basic indicators that we have accepted change,innovations like any other hinges in the door,open up to economic development,mpesa is such a big push…institutional changes as such

58. October 2nd, 2009 at 2:17 pm, Afrika als nächster Schauplatz für Innovation? | mobile zeitgeist ()

    [...] das erhaltene Geld abheben. M-Pesa hat bereits über 2.3 Millionen registrierte User. Doch warum ist M-Pesa so erfolgreich? Ganz einfach: Der Benutzer erspart sich die teure und lange Reise vom [...]

59. October 14th, 2009 at 5:59 am, Jaclyn Taylor-MSFI ()

    M-PESA finally goes international!

    http://www.capitalfm.co.ke/business/Kenyabusiness/London-welcomes-MPESA-3193.html

60. October 14th, 2009 at 8:37 pm, Emerging markets keep driving mobile innovation « Mobile Musings, Mostly ()

    [...] mobile P2P (person-to-person) payments, has nearly 7m users, transfers nearly $2m every day. Much written about and analyzed since its launch, M-PESA has spawned a host of similar services in other African countries, India, [...]

61. December 3rd, 2009 at 2:39 pm, Global Voices Online » M-banking: Going where no bank has gone before ()

    [...] yet reliable channel to send money “back home”. However, the benefits of the service soon drew others, who were otherwise neglected by the traditional banking system. This innovative financial service [...]

62. December 14th, 2009 at 3:21 pm, E-Biz course » Blog Archive » Financial trend on web ()

    [...] account transactions, payments etc. via a mobile device such as a mobile phone. Ex: Nokia money, Mpesa Bank disintermediation: A term used for the process of removing bank from financial [...]

63. December 15th, 2009 at 2:09 am, M-banking ¿alternativa al dinero? | +None ()

    [...] o no, podemos estar seguros que no remplaza al billete. Al final del día las compañías como M-PESA buscan monetizar y los gobiernos gravar la actvidad. [...]

64. January 11th, 2010 at 10:02 am, Kobangoshe ()

    M-pesa is definitely a technology based money transfer channel that is exciting and challenging to the conventional retail banking industry. The M-pesa agents are widely spread and in both rural and urban locations, some so local that consumers of the service, i.e. receivers of cash simply walk or cycle a kilometer or less to collect the cash. The cellular telephonic communications has revolutionalized the sector at the expense of the traditional wire based land phones. The rural folks are able to acquire this technology at a small cost and the chip (SIM Card) sell for as little as as Shs. 100 a unit. This is less than US $ 1.5 which most people can afford. They would rather have a SIM card and not the phone itself because they can share the tool. Does this M-pesa cost the agent anything? The simple answer is No! from a net effect perspective. The sender pays a commission upfront to send the cash. This caliberated depending on the amount involved. The maximum amount is KSh 30K at a time for any single transaction. The receiver also pays a commission for the service at the time of withdrawing the cash. The commission is shared between the Safaricom and M-pesa agent on a ratio basis. M-pesa is also being used to pay utility bills, such as electricity. The latest is that Kenya Airways air ticket sales can also be done on M-pesa. The maximum is about KShs 70K in this regard. Cashflow is an obvious challenge to M-pesa agents especially those in remote locations. Risk of being attacked from the bank or at the base is real. Security is hence an issue. Mobile banking service is therefore critical in remaote areas. Money lenders could also be doing serious business in such areas if their financial charges are justa token, more or less a social or community service on trust. If Zein has started Zein-zap, it is obvious there will be competition, but a tough one for Zein, coming so late in the day. Zein cellular market share in rural Kenya is also relatively small. It has to come with very attractive incentives to upset Safaricom’s M-pesa in the medium term.

65. February 8th, 2010 at 3:08 am, Chebet ()

    The benefits of MPesa cannot be overemphasized. I am one regular user and beneficiary. Most of the agents in rural Kenya are shopkeepers, petrol stations and hardware stores. Initially these agents had to deposit their cash frequently in the banks.Right now, most of the MPesa transfers are used to purchase supplies from the same shopkeepers, hence reduce their need to deposit cash. I have sent money to a shop agent to buy cement, supplies in the rural areas,bought airtime for my mother’s phone as well as paid for monthly tv subscriptions, electricity bills. People have been known to pay for their drinks in pubs with Mpesa lol

66. February 18th, 2010 at 2:18 am, Mac ()

    I think you will find that Mpesa will face very stiff competiton from other payment processing initiatives such as Mobicash, not necesarily in Kenya, but elsewhere on the continent and in asia. Their limitation is that the technology is based on the assumption that all users have a phone with the included sophistication to apply their sim-swap based application, whereas Mobicash relies on the ubiquitous cellular voice channel only. No user sophistication is required, as anyone can use an IVR or answer a phone.

67. February 18th, 2010 at 10:56 pm, Andy ()

    I think it will be very tough to beat M-PESA Mac, even if the technology is better!

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