Kenya pioneers 'mobile money' in African first

18 Jun, 2007

M-Pesa, a mobile money transfer system recently introduced by Safaricom, Kenya's leading mobile operator, that enables people with access to a cell phone to send and receive money over their handsets in an African first.
From dating services to stock market listings, mobile phones are changing the face of Kenya and this newest service is forcing banks to re-evaluate their approach to inhabitants of traditionally overlooked rural areas.
More than 60 percent of Kenyans have access to banks or microfinance institutions, but a staggering 38 percent - mostly living in rural areas - are entirely unbanked, according to data collected by Financial Sector Deepening Kenya (FSDK).
However, more than half the population either owns or has access to a mobile phone, generating a new means by which banking and financial services could be provided, according to Safaricom's Chief Financial Officer Les Baillie.
M-Pesa users can send up to 35,000 Kenyan Shillings (525 dollars, 390 euros) per transaction and keep up to 50,000 Kenyan Shillings in a "virtual account" for later use.
To use the service, senders hand over funds to a Safaricom shop to be converted into "mobile money" that is "transferred" by text to the recipient, who then withdraws it as cash at another Safaricom shop.
The fees for sending and withdrawing run up to 170 shillings (2.55 dollars, 1.89 euros), a mere fraction of the cost charged by other money transfer agencies, which ask for up to 10 percent of the amount being sent.
M-Pesa has proved popular not just for the security it guarantees in delivering money quickly and efficiently - users are asked for a secret code to withdraw funds - but also for its simplicity, which is drawing converts from those who formerly relied on regulated banks.
Not everyone has been won over by M-Pesa, with many skeptical of sending precious funds to relatives through the ether in a country where more than two-thirds of the population live below the poverty line.

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