Spotlight: M-PESA / Mobile Money

At the recent ForumOxford conference, Mi-Pay‘s Simon Cahill reported a most remarkable case of the use of mobile. He told us about the Kenyan operator Safaricom (in which Vodafone holds a stake) and its M-PESA service (which now also operates in Tanzania, South Africa and Afghanistan, too; you can apparently also send money to Kenya from the UK; see here a TV ad).

M-PESA is not new; it launched to the market already in 2007 and a pilot commenced as early as 2005 (here’s a link to a background document).

The success is staggering: according to Mr Cahill, no less than 20% of Kenya’s GDP is running through mobile money. Yes, I did write that: 20%!!! Safaricom asserts it moves nearly €150m worth of transactions per day (which would make it larger than Western Union).

It works basically like top-ups for prepaid phones: one party sends money to another one using the recipient’s phone number (and the sender’s PIN). The recipient will be notified by SMS and can then either use it as phone credit or receive a pay-out through an agent. Interestingly, Safaricom partnered with thousands of merchants, groceries, etc because the banking system in Kenya’s rural parts is so thinly developed that people could not have used it appropriately. Apparently, a lot of people do not actually take the cash out but keep the balance in the phone (for top-ups or just for keeps). This means that, as an aside, Safaricom is allegedly saving $12m for not having to print and distribute top-up cards for its prepaid customers.

M-PESA has more than 10m users in Kenya alone, and with the contribution to the country’s GDP as outlined above, it clearly is one of THE greatest mobile services in the world! And a final nugget by Mr Cahill: according to (I am quoting from memory, which might be a little shaky) the World Bank, mobile banking contributes 2-3% growth p.a. to the economy of a developing or emerging country.



The Economics of Apps (slides) – ForumOxford 15 Oct 2010


Conference: OSiM (London)


  1. Hi Volker,
    Thanks for the name check, but I’m Simon Cavill, not Cahill!

    All the best,


  2. My apologies, Mr Cavill (sic!) 🙂

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