Last week was the gigantic GSM Mobile World Congress in Barcelona. At the Mobile Money Forum, optimism ran fast and deep. That tone was a refreshing break from the steady tide of gloom and doom in the financial press. Safaricom won another award for its M-PESA mobile money service, which has now signed up over 5 million Kenyans.

There was also lot of congratulations for making it possible for people the world over to buy airtime in amounts as little as 5 cents from literally millions of sellers in the smallest villages. One commentator called it “the cheapest, biggest, most powerful sales channel in human history.” The mobile industry thinks they have a huge advantage in delivering financial services cheaply.

They’re right, but there’s too much assumption about how easy it will be. It’s one thing to ask a small store owner to invest $75 to buy scratch-off cards (the average Sarah Rotman and I found among agents we surveyed in Kenya). It’s a completely different game to ask him to put up $1,266 to pre-fund a mobile wallet (which is the minimum Safaricom requires for M-PESA agents). For many Kenyan store owners, that’s a ton of capital  (click here to download the presentation we did on M-PESA mobile banking agents).

No surprise, then, that liquidity management is the #1 cost incurred in the 125 outlets managed by the M-PESA agents we spoke with. Making sure they have enough cash on hand consumes 32% of the typical agent’s funds. Network managers, like PEP Intermedius whom we asked to present in Barcelona, play a huge role in making cash management work for M-PESA agents. Overall, we think the business case looks good for M-PESA agents. On average, we estimate smaller ones make USD 5 per day which may not sound like much, but mounts quickly to an annual return on investment well over 200%. Not bad. But the success is heavily dependent on the huge volumes of transactions. By our data, the typical M-PESA agent handles 86 transactions per day.

Will the agent business case hold up as well in other countries? If margins get too thin, will agents be willing to play the crucial role of interface between the world of virtual money and the cash economy in which customers live? We’re not certain its safe to assume they will.