M-Pesa: the story of how the world’s leading mobile money service was created in Kenya

On the 10th anniversary of M-Pesa, Michael Joseph, Vodafone Group’s Director of Mobile Money, reflects on the technical development and subsequent impact of the world’s leading mobile money service.

10 years of M-Pesa

As Vodafone marks the 10th anniversary of M-Pesa, the world’s leading mobile money service, it was revealed that a record 614 million M-Pesa transactions were processed during December 2016.

Vodafone now offers M-Pesa services in 10 countries: Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania and Tanzania.

As of the end of December 2016, M-Pesa served almost 29.5 million active customers through a network of more than 287,400 agents.

During 2016, the service processed around 6 billion transactions, peaking in December 2016 at 529 transactions every second.

M-Pesa was launched by Vodafone’s Kenyan associate, Safaricom, on 6 March 2007. The service is designed to enable customers safely and securely to send, receive and store money via a basic mobile phone and, more recently in some markets, using a smartphone app.

M-Pesa also reduces significantly the potential risks of street robbery, burglary and petty corruption within cash-based economies where only a small proportion of the population benefit from access to conventional financial services.

 

What is M-Pesa?

M-Pesa is the world’s most successful money transfer service. It enables millions of people who have access to a mobile phone, but do not have or have only limited access to a bank account, to send and receive money, top-up airtime, make bill payments and much more.

Customers register for the service at an authorised agent, often this is a small mobile phone store or retailer, and then deposit cash in exchange for electronic money which they can send to their family or friends. Once they have registered all transactions are completed securely by entering a PIN number and both parties receive an SMS confirming the amount that has been transferred. The recipient, who does not have to use the same network, receives the electronic money in real-time and then redeems it for cash by visiting another agent.

10 years of M-Pesa infographic

M-Pesa stories

"It will be easy for me to account for every shilling ..."

Patrick, a fruit and veg businessman, whose business has been a success because of M-Pesa, and plans to continue to use the service to grow his business. He also sends money to family members who live far away.

M-Pesa is helping businesses to be more efficient. Businesses can pay for business transactions directly using M-Pesa, for example a wholesaler can distribute goods via a lorry and receive payments via M-Pesa from the retailers. Additionally, business can, receive payments from customers via the paybill facility and can also pay employees directly into their M-Pesa accounts.

"If there wasn't any transportation, I don't know what I would have done."

Consolata, a mother whose life has been saved by using M-Pesa as part of the Foundation’s Maternal Health Ambulance Taxi service whose drivers are paid via M-Pesa.

M-Pesa (‘pesa’ is Swahili for the word ‘money’) enables people with an M-Pesa account to transfer money via SMS simply, securely and instantly. They can then “cash out” through the many M-Pesa agents located all around the country, send money to other users, pay for bills and school fees, pay for goods face to face in shops. In some countries there are products such as savings, loans and insurance in partnership with financial institutions.

"I dreamt of starting a similar business of my own ..."

Mary saved for 7 years to start her own M-Pesa agent business and achieve her dream of running her own business. Now, her life has been transformed – she has been able to pay for an education for two younger siblings, has managed to buy a car and build a house.

Vodafone’s M-Pesa service (literally ‘mobile money’), the world’s most successful money transfer service, is present in 10 countries and serves more than 29.5 million active users. Known as ‘Vodafone Cash’ in Ghana and Egypt, M-Pesa’s mobile payment system was originally pioneered by Vodafone in collaboration with Safaricom, Vodafone’s affiliate in Kenya.

"The most important time I used M-Pesa was when my mother was very ill."

Felista tells the story of how M-Pesa allowed her to send vital funds to her mother to pay for healthcare while she was desperately ill. She also uses the service to send money to her father to pay for her brother’s school fees.

M-Pesa (‘pesa’ is Swahili for the word ‘money’) enables people with an M-Pesa account to transfer money via SMS simply, securely and instantly. They can then “cash out” through the many M-Pesa agents located all around the country, send money to other users, pay for bills and school fees, pay for goods face to face in shops. In some countries there are products such as savings, loans and insurance in partnership with financial institutions.

"When I take a patient to hospital, I get paid via M-Pesa."

Jedhinda is a businessman who also drives a taxi for the Foundation’s Ambulance Taxi service and feels M-Pesa has brought him closer to his community.

M-Pesa (‘pesa’ is Swahili for the word ‘money’) enables people with an M-Pesa account to transfer money via SMS simply, securely and instantly. They can then “cash out” through the many M-Pesa agents located all around the country, send money to other users, pay for bills and school fees, pay for goods face to face in shops. In some countries there are products such as savings, loans and insurance in partnership with financial institutions.

Vodafone markets Partner markets

Innovative uses

In addition to the millions of person-to-person (P2P) and customer-to-business (C2B) transactions, M-Pesa has made a big difference to people’s lives in other ways.

In Tanzania for example, where the cost of travel prevents many people from getting the medical care they need, one non-governmental organisation (NGO), Comprehensive Community Based Rehabilitation in Tanzania (CCBRT), has used M-Pesa to send patients the money to pay for their travel to its hospital.

In Kenya, Water Company customers use M-Pesa to buy credits which are transferred from their phone to their key fob which is then used to pay for fresh, clean water when they need it.