June 2012
M-pesa

M-Pesa. Have you heard of it? (It's pronounced m-payssa)
The M is for mobile. Pesa is 'money' in Swahili.
M-Pesa was launched in 2007 in Kenya. It allows people to transfer money from one person to another by sending a text using any mobile phone equipped with a SIM card. People can join for free at a number of official agents on the presentation of an identity card. They credit money onto their mobile so they can then transfer it to the account held on the mobile of a beneficiary, who can then cash it at the offices of any participating agent. Most transactions are for less than 2000 Kenyan shillings (about 200 euros). M-Pesa is a service for subscribers of mobile phone operator Safaricom (both for prepaid card holders and those on a contract). The money transfers are managed directly by M-Pesa and it is not necessary to have access to a bank account. It is also a good way to transport money securely. As the owner of the phone must present identification when they withdraw money, a thief taking a phone cannot steal the money on the SIM card. I have often used this system so that I could travel with less cash on me.
The system is simple and fast, since a transfer takes no more than 30 seconds. M-Pesa is successful because it relies on traditional practises, such as the way people have always made payments to each other, while also making use of new technology such as the vast network of mobile phones and a network of agents.
Although free to join, M-Pesa deducts a small commission on each transfer.
Each agent receives basic training in the operation of M-pesa. Thanks to this commission a number of jobs have been created. M-Pesa is a symbol of the technological revolution in the world of money transfer and payment by mobile. On the 1st March 2012 M-Pesa counted in effect 14,652,593 active accounts, that is one in every three Kenyans.
The equivalent of 18% of the GDP of Kenya is transferred through M-Pesa. Many African countries are developing similar mobile money payments from Algeria to South Africa, from the Ivory Coast across to Tanzania. Other examples include MTN Money and Orange Money. But the capacity of the system to adapt to specific localities also explains its success. The same system is starting up in Afghanistan but, unlike in Kenya (where people use the menu on the SIM card), and due to low level of literacy in the country, an interface based on voice recognition has been introduced. In Kenya, M-Pesa allows for widening the terms of the services to the payment of bills and the transfers of funds from expats.