At Baird’s CMC, we have been closely following the progress of M-Pesa in Kenya – the mobile phone based payment and money transfer service we predicted would be game-changing when it was first launched in 2007. With 17 million users in Kenya (more than two-thirds of the country’s adult population) and 25 percent of the gross national product flowing through it, M-Pesa has become the most successful mobile phone based financial service in the developing world.
Why did M-Pesa meet with such resounding success in Kenya while similar mobile-money systems in other countries failed to create more than a ripple? A number of factors contributed to this. As of 2011, more than 75 percent of the country’s population did not have a bank account. Moreover, banks are not always perceived as safe by Kenyans, owing largely to the ethnic entanglements some banks got involved in during the post-election violence of 2008. In addition, unlike the proliferation of ATMs in the developed world, Kenya – like many other nations in the global South – has relatively few ATMs: one for every 18,000 people. It is also exorbitant to transfer money using other methods. By contrast, M-Pesa is easily accessible, convenient, safe and affordable. Safaricom’s strategic and consistent marketing campaign communicated these advantages clearly to people across the country.
In 2007, Kenya was ripe for such a service. As the economy expanded and urbanization increased, more and more urban workers needed to send money back home to their families in villages. However, money transfer methods hadn’t caught up with this reality. Bundles of cash were still making their way across the country in the hands of trusted friends or hidden in secret crevices of buses and trucks. As one recent article puts it, with the launch of the service people’s money “moved from mattresses to mobile accounts virtually overnight.” For the millions of workers with no access to formal money transfer and other cash management services, M-Pesa has been a boon.
In our next post, we examine how this service has changed the lives of Kenya’s people.
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FAQs
In addition, unlike the proliferation of ATMs in the developed world, Kenya – like many other nations in the global South – has relatively few ATMs: one for every 18,000 people. It is also exorbitant to transfer money using other methods. By contrast, M-Pesa is easily accessible, convenient, safe and affordable.
What evidence is there that M-Pesa was successful? ›
M-Pesa was able to grow rapidly and eventually dominate Kenya because of its unique development environment. Its seemingly miraculous success is not due to the design of the product itself, but more due to external factors such as the time, environment and policy environment in which the product was born.
What impact M-Pesa has had on Kenyan society and economy? ›
The program has helped people access banking services like savings and credit. Since then, their economic prospects have improved. The development of M-Pesa has also aided Kenya's economic expansion. An analysis by the World Bank found that since M-Pesa in 2007, it has contributed 2 percent to Kenya's GDP.
What is the story of M-Pesa? ›
M-PESA was first launched by the Kenyan mobile network operator Safaricom, where Vodafone is technically a minority shareholder (40%), in March 2007. M-PESA quickly captured a significant market share for cash transfers, and grew to 17 million subscribers by December 2011 in Kenya alone.
What are the benefits of M-Pesa in Kenya? ›
M-PESA was launched in Kenya in 2007 to make domestic remittance as simple as sending a text. Today, M-PESA allows customers across seven African markets to instantly and securely send funds, pay bills, make in-store payments, send money abroad, and access financial services such as loans and overdraft facilities.
What are the success factors of M-Pesa? ›
We focus on three key aspects of M-PESA's success: (i) creating awareness and building trust through branding; (ii) creating a consistent user experience while building an extensive channel of retail agents offering cash in/cash out services; and (iii) a customer pricing and agent commission structure that focus on key ...
What is the summary of M-Pesa? ›
M-Pesa is a virtual banking system that provides transaction services through a SIM card. Once the SIM has been inserted into the card slot of the mobile device, users can make payments and transfer money to vendors and family members with SMS messages.
What is the impact of M-Pesa? ›
Since then, it has had a major impact on the Kenyan economy, including helping increase the country's financial inclusion from only 26 percent in 2006 to 84 percent in 2021. Today, M‑Pesa now processes over a billion transactions each month across its markets.
What are the challenges facing M-Pesa agents in Kenya? ›
Security of money transactions, sending money to the wrong persons and lack of electronic money float were identified as challenges facing M-PESA service users and agents in Kenya. The knowledge generated in this study is important to the business community in Kenya and Mobile money service providers in Kenya.
Does M-PESA work in the USA? ›
Can you send M-PESA transfers from the US? Yes. You can send money from the US to be received into an M-PESA wallet. This service is offered by a selection of third party providers, including well known and popular international money transfer services like Western Union®, WorldRemit® and Wise.
Safaricom has announced the successful completion of its acquisition of M-Pesa Holding Company Limited from its parent company, Vodafone Group PLC, finalizing a process that began in April of this year.
How does M-PESA make money? ›
M-PESA deposits to clients are free, Safaricom still pays commissions to M-PESA agents performing this service. When a customer withdraws money, Safaricom will deduct a withdrawal fee. This fee is shared by Safaricom, the principal-agent, and the sub-agent.
Why is M-Pesa so popular in Africa? ›
Buying data (in Kenya mobile phone users don't have subscriptions but buy data and airtime on the go) is expensive for them. But using the Super App is free, as M-PESA makes its money by taking a share of each transaction performed.
Is M-Pesa profitable in Kenya? ›
Safaricom's M-PESA services continues to be the key cash cow for the business, contributing 42.1 per cent of the telcos revenue in the six months to 30th September 2023, up from 39.3 per cent in the same period in 2022.
What is the competitive advantage of M-Pesa? ›
It was found that the main sources of competitive advantage for M-PESA as a MMT service are: most of the people that use money transfer services in Kenya are on the M-PESA service, the integration of M-PESA and banks, the minimum adoption barriers and the simple and transparent pricing.
Why has M-Pesa become a very common form of e-payment in Kenya? ›
Emergent technology in the financial sector, or Fintech, has made it possible for financial services and products, like M-Pesa, to be more accessible at small costs. M-Pesa makes it possible for unbanked people to pay for and receive goods and services using a mobile phone instead of utilizing a brick-and-mortar bank.
At Baird’s CMC, we have been closely following the progress of M-Pesa in Kenya – the mobile phone based payment and money transfer service we predicted would be game-changing when it was first launched in 2007. With 17 million users in Kenya (more than two-thirds of the country’s adult population) and 25 percent of the gross national product flowing through it, M-Pesa has become the most successful mobile phone based financial service in the developing world.