M-Pesa leads Mobile-Payments in Kenya

M-Pesa was launched in March 2007 in Kenya, where it has reached 5 million customers. Money is transferred from one individual to another by SMS with any mobile phone that has a SIM-enabled card. Individuals can register at any agent kiosk by showing an identity card and pay no registration fees. Individuals buy airtime that is transferred to the mobile phone account of the recipient who can cash out at another agent kiosk. Most transactions are below KSH 2 000.

M-Pesa has been successful because it relies on traditional practices and structures and modernises these features. It is indeed a model based on indigenous payment practices, extended mobile phone networks and a large distribution network. The distribution network is based on agents who were already present in markets. Agents receive basic training from M-Pesa. Only three months after the launch of M-Pesa, the service had 400 agents, compared to 450 bank branches and 600 ATMs in Kenya. By 2009 M-Pesa had 3 400 agents. It is simple and quick, taking less than 30 seconds to carry out a transfer.

Another important aspect of M-Pesa is its adaptability to local specificities. It recently started in Afghanistan, instead of using the Kenyan SIM toolkit menu on the mobile, the provider is delivering a user interface model based on voice recognition that is adapted to the low literacy levels in the country. In Kenya, M-Pesa plans eventually to include bill payments and international remittances.

Source: Vodafone Status Reports in December 2008 and author.