The core business proposition of m pesa1 there is a sense of discomfort among the financial institutions about the success of m pesa and the. First, we use a panel differenceindifferences specification, in which we include household fixed effects to compare changes in the response of consumption to shocks across m pesa users and. Google testing replica of m pesa, kenya s mobile banking solution duration. In 2011, 70 percent of adult population in kenya had an mpesa account.
Choosing kenya due to the strong penetration of mobile technology within the country, safaricom and vodafone set out to design a mobilebased product, mpesa m for mobile, pesa the swahili word for money, to facilitate customer loan repayment to microfinance institutions. Most recently, a service called m shwari began offering mobilephone based savings accounts and microloans in 2012. The impact of pure mobile microfinancing on the poor. Case study enabling mobile money transfer the central bank of. Mpesa as a payments and money transfer platform was developed jointly by safaricom, a telco company, and the commercial bank of africa. In march 2007, kenya s largest mobile network operator, safaricom part of the vodafone group launched mpesa, an innovative payment service for the unbanked. Documents in econstor may be saved and copied for your. Mpesa could be used for money laundering in kenya, warns. M pesa catches on technology and innovation often catch on ahead of regulation. Case study enabling mobile money transfer the central bank. Tonny omwansa school of computing and informatics university of nairobi, kenya. The mpesa international money transfer imt service lets people in the uk send money directly to the mobile phones of people who have an account with the firm in kenya. Mpesa is a smallvalue electronic payment and store of value system that is accessible from ordinary mobile phones. Mpesa users are more likely to receive help when hit by bad luck.
Pdf in recent times, inexpensive mobile phone technology has become. Feb 21, 2017 the m pesa mobile payment system was launched in kenya in 2007. Mpesa is a money transfer system operated by safaricom, kenyas largest cellular phone. The contribution of mpesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant. The contribution of m pesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant. The economics of mpesa william jack and tavneet suri nber working paper no. It demonstrated that making mobile money work for loan repayments was not going to be easy. Well, he thought, it looks like the day of reckoning has arrived. Mpesa was initially launched by vodafone in kenya in march 2007, providing a simple yet highly secure platform from which to send and receive payments. Mobile phone services in kenya have operated as a duopoly with safaricom. Tonny kerage omwansa is a lecturer at the faculty of information.
Productivity, innovation, and entrepreneurship mobile money is a tool that allows individuals to make financial transactions using cell. The addition of international money transfer capabilities to mpesa with users in kenya and tanzania able to transfer or receive funds directly across borders has made illicit financial flows. Mpesa mobile money transfer service in kenya, best online. Community level economic effects of mpesa in kenya. However, the success of mobile money services more broadly has been limited in its 2012 mobile money adoption survey of mobile money services in.
Low mpesa was the first mobile money transfer service to be launched in kenya. Mobile payments go viral mpesa in kenya world bank. Specifically, we need to understand if and how m pesa affects households and communities. Mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. M pesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. It is licensed by the central bank of kenya, as a non banking financial service, so whilst not subject to the regulatory oversight of a. E40,o16,o33 abstract mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. Were crafting a new generation of leaders for kenya.
There have been some notable successes, such as vodafone safaricoms mpesa in kenya. Actual growth numbers for the kenyan economy suggest that the introduction of m pesa explains 14% of per. There is no charge to a customer for depositing funds into his account, but a sliding tariff is levied on withdrawals from mpesa accounts for example, the cost. On sunday, there was a daylong outage of mpesa which safaricom attributed to a power outage on a vodafone server in germany and this started quite a bit of discussion on twitter about why the service is run from germany and how authentically kenyan mpesa really is. In march 2007, kenyas largest mobile network operator, safaricom part of the. The mpesa mobile payment system was launched in kenya in 2007. Mpesa and records the quantity of emoney owned by a customer at a given time. The mpesa foundation academy wants to approach education differently. It also explains how the mobile financial services. Today m pesa is a fully commercial service with over. Mpesa a success story of digital financial inclusion by njuguna ndungu, associate professor of economics, university of nairobi and former governor, central bank of kenya mpesa was first developed as bank product in partnership between safaricom, a telecommunication telco company and the commercial bank of africa. We examine how m pesa is used as well as its economic impacts. Dec 08, 2016 a study finds the mobilemoney service m pesa has lifted 194,000, or 2 percent, of kenyan households out of poverty, having greater impact on femaleheaded households and helping 185,000 women shift from farming to business occupations.
However, contrary to expectations, m pesa did not reduce the. Financial services for the underbanked contributed by. By janet kamana, nairobi mpesa is a mobile money transfer service supported by safaricom, kenyas largest mobile network operator. The operational problems of cash transfers in kenya.
Google testing replica of mpesa, kenyas mobile banking solution. Most people probably dont think of kenya as an innovation and technology hub, but in 2007 it became the launching pad for mpesa, a transformative mobile phonebased platform for money transfer. The results were presented in a table format appendix 2. Faulu kenya had manual record keeping, which had been working for them for many years. Within the first eight months after its launch in march 2007, m pesa announced a subscription base of 900,000 users and 1,200 agents operating nationwide. Mukesh sadana, george mugweru, joyce murithi, david cracknell and graham a. Actual growth numbers for the kenyan economy suggest that the introduction of mpesa explains 14% of per.
The lack of competition enabled safaricom to capture the market and lead. This difference can be seen in mpesas approach to technology. The challenges and mpesas suggested responses are listed below. This indicates that the exceptional growth rate of mpesa in kenya is a unique phenomenon that may not be repeated in another country. In essence, mpesa is a persontoperson p2p money transfer system that allows individuals to make payments and send remittances. Mpesa m for mobile, pesa is swahili for money is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania.
Choosing kenya due to the strong penetration of mobile technology within the country, safaricom and vodafone set out to design a mobilebased product, mpesa m for mobile, pesa the swahili word for money, to facilitate customer loan repayment to. Real quick the story of mpesa, the book, credits kenya for the growth of mpesa. Safaricom to effectively deploy the m pesa scheme, and has encouraged millions of users to rapidly adopt the service. Mobile money services design and development for financial. Mpesa continues to dominate kenyan market mobile world live. The kenyan mpesa mobile telephone banking service was first conceived by safaricom in 2005.
Within five years of its launch, mpesa had 15 million customers, equivalent to 37. As a result, this paper recommends that service providers move away from importing the. This indicates that the exceptional growth rate of m pesa in kenya is a unique phenomenon that may not be repeated in another country. It has since expanded to afghanistan, south africa, india and in 2014 to romania and in 2015 to albania. The study was coauthored by tavneet suri of the mit sloan school of management. Social networks of mobile money in kenya home imtfi.
Pdf mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. Study objective this study is the first of its kind to explore the economic effects of mpesa in kenya at the community level. We examine how mpesa is used as well as its economic. Due in part to mpesas success, financial inclusion among kenyans grew from 27 percent in 2006 to over 75 percent in 2016 cbk, knbs, and fsd kenya 2016. In this chapter we draw on the case of mpesa in kenya. Mpesa is a mobile money transfer service in kenya, its one of the best online payment options. Mpesa, a mobilephone based electronic payments system, has been adopted by 8. Pdf an analysis of mpesa use in international transactions. A study finds the mobilemoney service mpesa has lifted 194,000, or 2 percent, of kenyan households out of poverty, having greater impact on femaleheaded households and helping 185,000 women shift from farming to business occupations. Today mpesa is a fully commercial service with over. Based on an already existing mobile network, mpesa grew rapidly to register almost 6 million users by march 2009, with an average of 7 million transfers per month. Within the article, michuki was quoted as saying, i dont know whether mpesa will end up well. Mpesa is perhaps the leading example of a successful mobile money transfer service. Social networks of mobile money in kenya companies and schools, pay as you go solar power, and microloans.
As a consequence, kenya has emerged as a leader in financial inclusion in subsaharan africa. Most colleges in kenya are focused on academic results, says githuka. In kenya, mpesa is dominant, but sometimes the system goes down and all musoni services stall. Safaricom, mpesa has become ubiquitous to everyday life in the. Mar 06, 2017 the addition of international money transfer capabilities to m pesa with users in kenya and tanzania able to transfer or receive funds directly across borders has made illicit financial flows.
Usage and impact from mpesa august 2009 brief despite growing agreement on the potential of technology to expand access to. Mpesa was developed by mobile phone operator vodafone and launched commercially by its kenyan affiliate safaricom in march 2007. Browse here for more information regarding m pesa statistics, history of m pesa, access trust deed forms and next of kin claim procedure. They emphasized several tips to prevent mpesa fraud including. Sage helps academy create next generation of leaders. Success stories from a dynamic continent, world bank, august 2010. The mpesa staff acknowledged the womens concerns and highlighted that reported cases were always investigated. Mpesa and the rise of the global mobile money market. But the question of who created mpesa has never been resolveduntil now.
Kenya s disruptive mobile money innovation balloonview press, 2012. Today, as it faces new challenges, it has 30 million users in 10 countries and three continents. Within the first eight months after its launch in march 2007, mpesa announced a subscription base of 900,000 users and 1,200 agents operating nationwide. Safaricom to effectively deploy the mpesa scheme, and has encouraged millions of users to rapidly adopt the service. The economics of m pesa william jack and tavneet suri nber working paper no.
Contrary to what you might think, the ability to combine pdf files is not a mystery or rocket science if you are a student or one of the countless individuals who deal with or use of electronic documents pdf files on a day to day basis but do not know how to combine pdf files, then this article is for you. Specifically, we need to understand if and how mpesa affects households and communities. M pesa m for mobile, pesa is swahili for money is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania. The mpesa revolution that launched kenya to a leading position in the development of mobile money has led the way to the systematic study of the potential of digital finance to improve lives and strengthen state capacity. We examine how mpesa is used as well as its economic impacts. For faulu kenya, the m pesa pilot test was also very important. Anyone can send money in all over kenya through mpesa. Mpesa was first developed as bank product in partnership between safaricom, a telecommunication telco company and the. To study how m pesa has affected risk sharing in kenya, we analyze data from a large household panel survey conducted between late 2008 and early 2010.
Due in part to mpesa s success, finan cial inclusion among kenyans grew from 27 percent in 2006 to over 75 percent in 2016 cbk, knbs, and fsd kenya 2016. Financial services for the underbanked contributed. Why mpesa outperforms other developing country mobile moneyschemes. Browse here for more information regarding mpesa statistics, history of mpesa, access trust deed forms and next of kin claim procedure. Mpesa mobile money transfer service in kenya, best. Before he could even consult his mpesa related files his phone rang. First, we use a panel differenceindifferences specification, in which we include household fixed effects to compare changes in the response of consumption to shocks across mpesa users and. Many studies exist on m pesa, and many others are under way that focus on examining the effects of m pesa at the household. Vodafones vision for this service combined existing sms technology with the extraordinary growth in mobile phone ownership. O16,o33,o55 abstract mobile money is a tool that allows individuals to make financial transactions using cell phone technology.
To study how mpesa has affected risk sharing in kenya, we analyze data from a large household panel survey conducted between late 2008 and early 2010. It is arguably the most developed mobile money transfer system in the world, and has transformed the lives of many kenyans. Study objective this study is the first of its kind to explore the economic effects of m pesa in kenya at the community level. Do the m pesa rails contribute to financial inclusion. M pesa was initially launched by vodafone in kenya in march 2007, providing a simple yet highly secure platform from which to send and receive payments. Mpesa launches uktokenya mobile money transfer service. Utilizing simple sms technology on safaricoms data network, mpesa is cheaper, faster and more secure than the previously existing alternatives. Pesa is hugely successful in kenya and less so elsewhere and mpesa.
Furthermore, the study shows that mpesa is ahead of 34 kenyan banks in international money transfers. The core business proposition of mpesa1 there is a sense of discomfort among the financial institutions about the success of mpesa and the. Practitioners insight mpesa a success story of digital. The recent and widespread availability of affordable mobile phone technology in developing countries has paved the way for the development of a number of mobile money and electronic remittance services. Many studies exist on mpesa, and many others are under way that focus on examining the effects of mpesa at the household. Within the first month safaricom had registered over 20,000 mpesa customers, well ahead of the targeted business plan. In 2011, 70 percent of adult population in kenya had an m pesa account. Mpesa catches on technology and innovation often catch on ahead of regulation. Enabling mobile money transfer the central bank of kenyas. The lack of financial inclusion in kenya is fueled. In 2016 over 75% of the adult population in kenya m pesa started in 2007 as an electronic money transfer product. Most recently, a service called mshwari began offering mobilephone based savings accounts and microloans in 2012. One of the most successful of these services is safaricoms mpesa program, launched in the east african nation of kenya in march 2007. Faulu had difficulties in managing the manual proce dure and.
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