By Michael Kachitsa
M-Pesa (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer service, payments and micro-financing service, launched in 2007 by Vodafone Group plc and Safaricom, the largest mobile network operator in Kenya. It has since expanded to Tanzania, Mozambique, DRC, Lesotho, Ghana, Egypt, Afghanistan, South Africa, India, Romania, and Albania. M-Pesa allows users to deposit, withdraw, transfer money, pay for goods and services (Lipa na M-Pesa), access credit and savings, all with a mobile device.
The initial concept of M-Pesa was to create a service which would allow microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers. This would enable microfinance institutions (MFIs) to offer more competitive loan rates to their users, as costs are lower than when dealing in cash. The users of the service would gain through being able to track their finances more easily. When the service was piloted, customers adopted the service for a variety of alternative uses and complications arose with Faulu, the partnering MFI. In discussion with other parties, M-Pesa was re-focused and launched with a different value proposition: sending remittances home across the country and making payments.
M-Pesa is a branchless banking service; M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents.
M-Pesa has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. By June 2016, a total of 7 million M-Pesa accounts have been opened in Tanzania by Vodacom. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in otherwise largely cash-based societies.
M-Pesa is operated by Safaricom and Vodacom, mobile network operators (MNO) not classed as deposit-taking institutions, such as a bank. M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. The service enables its users to:
- deposit and withdraw money
- transfer money to other users
- pay bills
- purchase airtime
- save money in a virtual account (Mshwari)
- transfer money between the service and, in some markets like Kenya, a bank account
- Borrow money to complete transaction when you have insufficient cash(Fuliza)
Partnerships with Kenyan banks offer expanded banking services like interest-bearing accounts, loans, and insurance.
Source for more information – Safaricom