How it began
M-Pesa was developed by the mobile operator Vodafone and launched commercially by its Kenyan affiliate Safaricom in March 2007. The name joins M for mobile with pesa, the Swahili word for money. A 2010 study published by the World Bank attributed its growth to three things: conditions in Kenya that suited mobile money, a service design that encouraged rapid adoption, and a business strategy that reached a critical mass of customers quickly.
How it works
A customer registers at an authorized M-Pesa retail outlet and receives an electronic money account linked to the phone number and reached through an application on the SIM card. Cash is deposited or withdrawn by exchanging it for electronic value at a network of retail agents. From the phone the customer can then transfer money to another person, pay bills and buy airtime. No bank account or bank branch is needed.
Who pushed back
The service has been criticized over its pricing, with critics arguing that its costs fall disproportionately on poorer users. Studies of its role in reducing poverty have reported mixed results. The World Bank paper also pointed to pending work on formal regulation and on pricing that would better suit poorer customers.
What changed first
By March 2010, three years after launch, M-Pesa had been adopted by 9 million customers in Kenya. The World Bank paper noted that it avoided the chicken-and-egg problem that afflicts new payment systems, in which users and cash outlets each wait for the other. Early adopters were generally more affluent and better educated than the average Kenyan.
Where it stands today
Safaricom reported at the fifteenth anniversary that M-Pesa had more than 51 million customers and 600,000 agents across Kenya, Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana and Egypt, and processed more than 61 million transactions a day. Services added since launch include merchant payments, credit, savings and an investment fund.
