India Broadband Forum

Rameshjeee

M-Pesa - Africa's cell phone cash

M-PESA (M for mobile, pesa for money) is the product name of a mobile-phone based money transfer service that was developed by Sagentia for Vodafone.

The initial concept of M-PESA was to create a service which allowed 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 rates to their users as there is a reduced cost of dealing in cash. The users of the service would gain through a being able to track their finances more easily. However, when the service was trialled in Kenya customers adopted the functionality for a variety of alternative uses. Complications also arose with Faulu, the partnering microfinance institution. M-PESA was re-focused and launched with a different value proposition: sending remittances home across the country and making payments.

• M-Pesa is the name of a mobile-phone based money transfer service that was developed by Sagentia for Vodafone.
  
  
• The platform is also operationally run by Sagentia on behalf of Vodafone.
  
  
• The development was initially sponsored by the The service enables its users to deposit and withdraw money, transfer money to other users and non-users, pay bills, and purchase airtime.
  
  
• M-Pesa is a branchless banking service, meaning that it is designed so that users can conduct basic banking transactions without the need to visit bank branches.
  
  
• Instead, M-Pesa users can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents.
  
  
• M-Pesa is operated by mobile network operators that are not regulated as deposit-taking institutions (such as banks), so M-Pesa may not be advertised as a banking service.

The major success of M-Pesa has been that that it has created a highly popular, affordable payment service with only limited involvement of a bank.

M-Pesa was first launched by Kenyan mobile network operator Safaricom, an affiliate of Vodafone, in March 2007. M-Pesa quickly captured significant market share for cash transfers, and grew astoundingly quickly, capturing 6.5 million subscribers by May 2009 with 2 million daily transactions in Kenya alone.

The growth of the service forced formal banking institutions to take note of the new venture. In December of 2008, a group of banks reportedly lobbied the Kenyan finance minister to audit M-Pesa, in an effort to at least slow the growth of the service. This ploy failed, as the audit found that the service was robust.

M-Pesa has also been launched in Tanzania by Vodacom, a subsidiary of Vodafone, as well as in Afghanistan, where Vodafone is partnering with mobile network operator Roshan to provide M-Paisa, the local brand of the service.

Plans to expand M-Pesa to India, Egypt and South Africa as well as the launch of an international money transfer service for M-Pesa in Kenya are the next steps ahead for M-Pesa as of early 2009.

The user interface technology of M-Pesa differs between Safaricom of Kenya and Vodacom of Tanzania, although the underlying platform is the same. While Safaricom uses SIM toolkit to provide handset menus for accessing the service, Vodacom relies on USSD to provide users with menus.

How does mobile money get in and out of a cellphone?
Systems vary in detail, but Nairobi resident Mary Wanjiku uses M-PESA, the continent’s first such system set up by Kenyan mobile operator Safaricom, to send money to her mother in the countryside every month.

Here’s what happens:

• Mary and her mother go to their nearest M-PESA agents with their official IDs and cellphones to register themselves and their SIM cards on the system.
  
  
• Once she has activated her account, Mary charges up her account by giving the agent cash. The transaction and balance are confirmed via an SMS.
  
  
• Mary then transfers, via SMS, 3,000 Kenyan shillings ($38.40) to her mother’s mobile phone account. M-PESA charges her a flat fee of 30 shillings.
  
  
• Her mother receives the SMS and keeps it on her phone until the local M-PESA agent passes through her village. She then transfers that money to the agent’s phone via SMS, and the agent gives her the cash. Her mother is charged 45 shillings, a fee proportionate to the size of the withdrawal.
  
  
• Mary can also send money to friends who have not registered for M-PESA or who use a different phone network. In these cases, the fees at both ends of the transfer are higher.

Source: Wikipedia & Google

saurav_k

Good info.

kirankumargb

Nice info Jee.

meetdilip

Good one

panchabhut

good one. but what would happen if the agent decides to take the money and flee? its Africa we are talking about after all.