M-Pesa, The Mobile Payments Pioneer

By Mohammed Waseem

People generally expect technologies to develop in developed nations. But it was proved the otherwise, when the revolutionary mobile wallet technology was pioneered by an African nation – Kenya. Without any doubt, it is one of the most successful technologies which would define mode of payment and money transfer in the near future. Companies in developed nations have already begun adopting this technology and have launched mobile wallets. In fact, even companies in many developing nations have piloted it.

The service was first launched by Kenyan mobile operator Safaricom, which has 75% of the market share in Kenya. 80% of their customers already use mobile wallet service, which is called M-Pesa. Safaricom saw a demand and supply gap in the country’s banking system and realized they could fill this gap by giving access to accounts to those people who had no access to banks.

Mobile WalletsAnother reason for them to launch this service was the need of the Kenyans to transfer money to other parts of the country, which previously happened either by a person himself/herself travelling in order to give money to their family or friends or by sending it through a trusted bus driver. With M-Pesa, users can send money to even the most remote parts of the country in seconds.

M-Pesa is currently the most developed mobile payment system in the world. 43% of Kenya’s GDP reportedly flows through M-Pesa. Users can withdraw and deposit money on their mobile wallet with this service at any M-Pesa agent location across the country, they can transfer money to M-Pesa users as well as non-users, they can pay bills and purchase airtime, they can transfer money to bank accounts and they can also pay the grocers for grocery.

Initially launched in Kenya, M-Pesa later expanded to Tanzania and Afghanistan in 2008, South Africa in 2010 and India in 2013. Tanzania has approximately 5 million subscribers to M-Pesa. In Afghanistan, M-Pesa was initially used to pay policemen’s salary, now it has expanded to include limited merchant payments, money transfers, loan disbursements and payments. Growth of M-Pesa has been slow in South Africa and India but they are working on repositioning the brand and are trying different ways to promote the product.

Safaricom recently launched a service called M-Shwari, which is a paperless banking service offered through M-Pesa. Users can open bank accounts, manage the bank account, save money and access microfinance right from their mobile device.

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