Designing Mobile Money Services Lessons from M-PESA

in March 2007. Six million customers have registered with the service (see Figure 1), which represents nearly half the customer base of Safaricom, the mobile operator that launched M-PESA. This is a level of penetration in the mobile base that no other mobile phone–based service has achieved, outside of voice and text messaging. The figures for person-to-person (P2P) transfers are equally impressive: over USD 1.6 billion (120 billion Kenyan Shillings [KSh]) worth of such transfers have been made through the M-PESA system. Its agent network 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. M-PESA facilitates a variety of financial transactions through the mobile phone. To access its services, individuals must register at an authorized M-PESA retail agent outlet. They then get an individual electronic money account that is managed by Safaricom, which in turn deposits the full value its customers store in M-PESA accounts at a pooled account in a regulated bank. Thus, the issuer of MPESA accounts is Safaricom, but the value in the accounts is entirely backed by highly liquid deposits at a commercial bank. Customers can use their mobile phones to transfer money to both registered and non-registered users, check their account balance, pay bills, purchase mobile phone credit, and transfer such credit to other users. They can also make deposits and withdraw cash from their M-PESA account by visiting an authorized M-PESA agent. M-PESA is not the only mobile money service to be launched in Africa, but it is the most successful. For example, South Africa’s WIZZIT has managed to attract 250,000 customers in more than four years of operation. Neighboring Tanzania launched its own version of M-PESA in April 2008, but it has only recently crossed the 100,000 customer mark. So why has this service grown so rapidly within the Kenyan context?