The contribution of m pesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant. Schematic of m pesa how m pesa works in order to start. Mpesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. Apr 09, 2018 repurposing your sim card and phone account into a bank account for virtual currency thats just a fancy word for a digital account balance, mpesa also allows you to pay for things like rent or utilities and send money to others. The longrun poverty and gender impacts of mobile money science. 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 is for mobile while pesa is a swahili word for money. The typical sales cycle of a business would include the raw material being fashioned into the finished product that is sold to the customer.
By janet kamana, nairobi m pesa is a mobile money transfer service supported by safaricom, kenyas largest mobile network operator. Financial services for the underbanked contributed. Apr 25, 2020 mpesa is the worlds most successful mobile money product, and it is obvious more companies will probably try and copy the new service. Nov 01, 2018 father of m pesa michael joseph, former safaricom ceo, talks to cnns richard quest about the future of banking and how kenya is positioned to lead once again. Mpesa enables customers to send, receive and store money safely and securely via a basic smartphone. In developing countries, bank branches and fixedline telecommunications are scarce, whereas mobile phones are plentiful.
The user uptake of the service in tanzania has been much slower compared to its northern. Management news, advice, and ideas for business leaders. The mshwari 52 week challenge this is a saving program that aims at cultivating a saving culture among kenyans through the easy to use mshwari service. An mpesa customers simcard has the full mpesa menu and is able to carry out all the services described above. The m shwari 52 week challenge this is a saving program that aims at cultivating a saving culture among kenyans through the easy to use m shwari service. While mpesa is primarily known for facilitating peertopeer money transfers, lending is also a major part of the business model of the platforms parent company safaricom. Mpesa mobile money transfer service in kenya, best online. One of the main reasons for mpesas almost universal success in kenya was the ease and speed of sending money. To transact, your safaricom line and mpesa account must be active. A stringent formal aggregatoryou mpesa agreement applies modeled along a sample safaricom mpesa aggregatoragent agreement, the sample is here.
How does the mpesa service work and what are the risks. There have been some notable successes, such as vodafone safaricoms mpesa in kenya. Calculate mpesa charges using this safaricom mpesa charges. Within the first month safaricom had registered over 20,000 mpesa customers, well ahead of the targeted business plan. Pesa does not pay interest on deposits, and does not make loans, it can usefully be thought of as providing financial transaction services and that has operated, until recently, in parallel with the. It is arguably the most developed mobile money transfer system in the world, and has transformed the lives of many kenyans. The mpesa mobile payment system was launched in kenya in 2007. Keeping these agent points stocked with cash and efloat so that they can meet customers needs for deposits and withdrawals is a major challenge, and the subject of this article. This rapid takeup is a clear sign that mpesa fills a gap in the market. You can even view your data using charts and graphs. Learn about mpesa charges, services and transaction rates. Mpesa facilitates a variety of financial transactions through the mobile phone. The contribution of mpesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant.
The story of m pesa its narrated by michael joseph, the managing director of mobile money at vodafone and the programs founder. Goodwill in the form of an application processing fee normally applies. Vodafone group launched mpesa, an innovative payment service for the unbanked. Jack and suri 2011 find that over 75% of users use m pesa for saving and cite ease of use and safety as reasons for doing so. National id, passportalien idmilitary id additional for bank settlement. The longrun povertyand gender impacts of mobile money tavneet suri1,2,3,4,5 and william jack6 mobile money, a service that allows monetary value to be stored on a mobile phone and sent to other users via text messages, has been adopted by the vast majority of kenyan households. By janet kamana, nairobi mpesa is a mobile money transfer service supported by safaricom, kenyas largest mobile network operator. Pesa in march 2007, wary of regulation by the central bank of kenya, safaricom has been at pains to stress that m. Safaricoms mpesa has a new rival in pesalink from kenya.
M pesa was originally designed as a system to allow microfinanceloan repayments to be made by phone, reducing the costs associated with handling. Most of our markets have launched the mpesa smartphone app, providing customers with a digital platform to manage their mpesa accounts, and also to make. Financial services for the underbanked contributed by. The longrun povertyand gender impacts of mobile money. Mpesa is a mobile money transfer service in kenya, its one of the best online payment options. One year after the kenyan launch, vodacom launched mpesa in april 2008 in tanzania. The economics of m pesa william jack and tavneet suri nber working paper no. Mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. M pesa works with over 30 mfis in africa and india. Money transfer via sms texting was the first service offered. Safaricom briefing to cbk regarding international money transfer.
Financial inclusion enabler itut technology watch report may 20 globally, more than 2. Mpesas tremendous success in kenya has led vodafone to expand elsewhere, with mixed results. A stringent formal aggregatoryou m pesa agreement applies modeled along a sample safaricom m pesa aggregatoragent agreement, the sample is here. Rather than needing to download an app, mpesa works directly over your phone account.
Safaricom makes an effort to maintain its reputation as a company that works. Nov 19, 2016 in this video how to use m pesa wallet m pesa is an innovative mobile money digital wallet all type mobile prepaid,postpaid recharges withdraw to bank. In january 2009, the treasury issued a statement on the audit. Mpesa has become part and parcel for kenyans daily lives. See how it works and its uses, and learn about lipa na m pesa, paybill and atm withdrawal charges. Case study enabling mobile money transfer the central bank of. Learn to how deposit and withdrawal money from your lipa na mpesa. The charges may look to be quite high, and to some, it may at first seem better to take an mshwari, or a kcb mpesa loan to finish a transaction than going with fulizas overdraft.
The new 2020 mpesa commission structure is aimed at ensuring agents getter better rewards on highvalue transactions and as an incentive to hold adequate float. In case you did know, mpesa is a mobile money service based in kenya. The first section is written by nick hughes, a vodafone executive who started this project in 2003 and now heads a mobile payments team with the task of growing the business. May 27, 2012 the m pesa aggregator gets only 20% of your commissions send directly to him by safaricom. The mpesa aggregator gets only 20% of your commissions send directly to him by safaricom. The reality, however, is that mpesa is in the business of making transfers that the bank couldnt in an economically efficient fashion. Learn about m pesa charges, services and transaction rates. The mpesa service enables users to make financial transactions through their mobile devices. A mobile banking service that allows users to store and transfer money through their mobile phones.
If you want to want to get even more technical, you can export your transactions to either excel spreadsheets, word, pdf or whatever works for you. The mpesa solution for the vbs business customer uses its product features to provide two main products to businesses payments and cash collections. The story so far tamara cook and claudia mckay access to finance forum reports by cgap and its partners no. T his presents a wholly incomplete picture of the role that mpesa pla ys in the lives of kenyas poor. Mpesa has spread quickly, and by 2010 had become the most successful mobilephonebased financial service in the developing world. Soon after mpesa was introduced, kenyas banks publicly objected.
The proposition for humanitarian and international organisations c1. Most of our markets have launched the m pesa smartphone app, providing customers with a digital platform to manage their m pesa accounts, and also to make faster purchases at merchant points via qr code. What kenyas mobile money success could mean for the arab world. One theory posits that m pesa substitutes with informal savings products and complements with formal ones. The mpesa payment platform fdcf project dfid an introduction nick hughes november 2005 nov 28th 05 2 confidential the market need network operator customers banks microfinance access to basic financial services inc credit secure and convenient means of cash in and cash out receipt of payments purchase of goodsservices. Nov 17, 2008 an mpesa customers simcard has the full mpesa menu and is able to carry out all the services described above. Many mobile network operators have been eager to repeat mpesas success in kenya, but the formula for this success is not yet clear.
Basics of starting an mpesa shop business in kenyakuza. After a stellar launch, the company has continued to be incredibly successful and has shown no signs of slowing down. It was established in 2007 as a micro financing system, but later redesigned to become a mobile money system. Many kenyans who work in cities have relatives still living in rural farm regions, which are expensive to travel to or lack the infrastructure to send cash by post.
An unregistered customer is one that receives money from an mpesa customer and does not have to be a safaricom subscriber. Low levels of financial inclusion represent a barrier to socioeconomic development in developing countries. M pesa enables customers to send, receive and store money safely and securely via a basic smartphone. Today, as it faces new challenges, it has 30 million users in 10 countries and three continents. How to withdraw money from lipa na mpesa or transfer to.
If you have been thinking of starting a business in kenya, an mpesa shop has probably crossed your mind. How mpesa works, its services, charges and transaction rates. Mpesa was originally designed as a system to allow microfinanceloan repayments to be made by phone, reducing the costs associated with handling. M pesa has spread quickly, and by 2010 had become the most successful mobilephonebased financial service in the developing world.
Using a basic mobile phone, users could electronically send and withdraw funds. How mobile money has changed lives in kenya page 3 of 3 using a bank for the first time banks, cooperatives, and nonbank financial service providers have quickly connected to mpesa in order to allow existing customers to access their accounts more easily, though to date there have been. O16,o33,o55 abstract mobile money is a tool that allows individuals to make financial transactions using cell phone technology. This 6minute animation tells the story of how mpesa, the popular mobile money transfer program, came to be in kenya. Mpesa was originally introduced in kenya as an alternative way for the unbanked. The proposition for humanitarian and international organisations. Simply defined, mpesa is a mobile money transfer application, a service from the safaricom network company. Suri and jack show that increased access to mobile money has increased longterm consumption in kenya. Learn about the process and how mpesa security works. Many kenyans are familiar with this application because it is widely used in the country. Safaricoms lipa na mpesa has grown to become a reliable option for paying bills, buying goods and services and even banking by allowing you to send money to your bank account directly from mpesa.
One competitor of mpesa allows agents to set deposit and withdrawal fees. The minister of finance ordered the national treasury and the central bank to conduct an audit of mpesa. Mpesa business model canvas click to enlarge mpesa 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. Its agent net work has grown in parallel with the customer base, and the service can be accessed at nearly nine thousand retail outlets nationwide, in both urban and rural areas. Mpesa and the rise of the global mobile money market. See how it works and its uses, and learn about lipa na m. This way you are able to clearly see when your spending habits increased or decreased. How mpesa mobile money works to access the mpesa service, customers must first. In march 2007, safaricom, kenyas leading mobile operator, revolutionized the way kenyans manage money by introducing mpesa.
Mpesa rollouts in markets like tanzania 5 million users have fared well. Within five years of its launch, mpesa had 15 million customers, equivalent to 37. The mpesa payment platform fdcf project dfid an introduction. Jan 23, 2020 the new 2020 mpesa commission structure is aimed at ensuring agents getter better rewards on highvalue transactions and as an incentive to hold adequate float. In this video how to use mpesa wallet mpesa is an innovative mobile money digital wallet all type mobile prepaid,postpaid recharges withdraw to bank.
Cancelled cheque or letter from bank stating owners bank details 4. We examine how mpesa is used as well as its economic impacts. With over 27 million people touched by the power of mpesa, it has become an integral part of life in kenya as well as a gateway to success for most individuals. Anyone can send money in all over kenya through mpesa. Mpesa created a reason for people to work with banks. Safaricom allows bulk payments to pay salaries with mpesa organizational accounts created so schools can accept fees with mpesa. Schematic of m pesa how m pesa works in order to start using m pesa all you from aa 1. Copy of identification documents of persons opening the account i. Understanding fuliza safaricoms mpesa overdraft facility. Pdf an analysis of mpesa use in international transactions. You cannot withdraw less than ksh 50 at an mpesa agent outlet. Mobile money for the unbanked turning cellphones into 24hour tellers in kenya two authors have written this case study, each taking up one part of the story. The curious case of mpesas miraculous poverty reduction. M pesa business model canvas click to enlarge m pesa 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.
Mpesa shops are quite profitable businesses and what makes them an attractive investment is that they are quite easy to start and you can operate both as a main or side hustle. You will get the following message you are opting in to mpesa global enter mpesa pin. An unregistered customer can only get the cash sent to himher but cannot carry out other mpesa transactions. What are the benefits of the set fees that mpesa currently employs. They argued that safaricom was operating as a bank without the required banking license. The animation was produced as part of a series of online courses designed and delivered by the usaid mobile solutions team, qed, and techchange, a dc based organization that specializes in online training for. Mpesa has been especially successful in reaching lowincome kenyans. These factors have led to the use of mobile money, whereby money can be deposited to an account linked to a phone, transferred to other users, and converted back into cash. The nature of the relationship between m pesa and other financial products remains a matter of debate.
Aug 12, 2015 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 m pesa aggregator gets only 20% of your commissions send directly to him by safaricom. Mobile money services design and development for financial. At an agent outlet, you cannot deposit money directly into another mpesa customers account. M pesa was originally introduced in kenya as an alternative way for the unbanked.
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