M-Pesa In Kenya Research Articles

Simple mobile banking: learning from developing countries

Despite their simplicity and manifest usefulness, mobile banking systems have hardly developed in the world’s richest countries. On the other hand, some mobile banking initiatives have obtained resounding success in developing countries, as is the case of M-Pesa in Kenya. Among the reasons justifying their acceptance are context factors specific to those countries, and to be precise, the difficulty of accessing traditional financial services. But without ignoring these circumstances, an intelligent design during the exploitation phase is what has made mobile banking go from a fortunate concept to a successful innovation. This is why there are a priori no barriers preventing a similar process from occurring in developed countries as well. In fact, the profitability of initiatives such as M-Pesa is seducing enough to assert that, in spite of internet-through-mobile banking being available in smartphones, simple mobile banking can serve niche markets in wealthier countries such as the unbanked or those technologically weakly-equipped or weakly-skilled.

Mobile Money: A Theoretical Study of Alternative Media of Exchange, and an Empirical Study with Respect to M-Pesa in Kenya

Why are banks important to us? To understand the role banks play in providing transaction services, I study an episode from Kenya where individuals use an alternative medium of exchange (M-Pesa), where cellphone minutes take on the role of currency – mobile money. Individuals do not have easy access to banking services and therefore face several risks while transacting with and storing cash, and hence M-Pesa pitches in as a substitute to banks. Theoretically, I consider an analogous environment by using a search-theoretic monetary model to establish important results. Using survey data from Kenya, I study the usage of this facility and find that individuals’ perceived riskiness of cash and their geographical distance from banks are key determinants of usage, confirming the hypotheses from the model.

Review: Design with the Other 90%: Cities; Design with the Other 90%: Cities; Design with the Other 90%: Cities; and Design with the Other 90%: Cities

Design with the Other 90%: Cities Cooper-Hewitt National Design Museum at the United Nations Visitor Center, New York City 15 October 2011–9 January 2012 Museum of Contemporary Craft and Action Center at Mercy Corps, Portland, Oregon 17 August 2012–5 January 2013 Mildred Lane Kemper Art Museum, Washington University, St. Louis, Missouri 14 September 2012–7 January 2013 David J. Sencer CDC Museum, Centers for Disease Control and Prevention, Atlanta 4 February–24 May 2013 A street vendor in Durban partners with an architect and a “social art and architecture” collective to build a prototype mobile vending cart (Spaza-de-Move-on) that serves as table, chair, and storage. Mobile phone programs are used to provide access to HIV information and testing kits (Text to Change, Uganda), transfer money from migrant workers back to their families (M-Pesa in Kenya), and provide a job listing network (Babajob.com in Bangalore). Modified river boats in Bangladesh become floating schools, libraries, and health clinics in flood-prone districts. In Caracas an Integral Urban Project replaces precarious resident-built stairways that climb the steep hills to the informal settlements above the city with concrete stairs whose public landings provide new spaces of social interaction while carrying beneath them critical infrastructure (water, sewage electricity, gas, and water lines). Architects and engineers working with community partners fashion new building materials out of local and recycled materials—insulation panels in Pakistan using straw and sludge from a nearby paper factory; bamboo loofah wall panels in Paraguay; cow dung bricks in Indonesia; stabilized soil blocks in Uganda. Grassroots Mapping in Lima and Map Kibera in Nairobi combine local data gathering with sophisticated digital applications to facilitate comprehensive planning. Incremental Housing in Iquique, Chile, provides the serviced half of a house (structure, wet areas, stairs, roof), allowing the resident to complete the adjacent part gradually with limited means. Guangzhou Bus Rapid Transit links outlying villages to the city center. Shack/Slum Dwellers International, a membership organization led by women operating in thirty-four countries, builds capacity among the urban poor with an emphasis on local credit and savings. These are some of the sixty projects from forty countries documented in Design with the Other 90%: Cities …

Exploring demographic differences in the adoption of mobile money: M-PESA in Kenya

Mobile money is an innovative concept that has a fundamental impact on how marketing exchanges and transactions are consummated. The concept of exchange and payment is at the core of marketing and the ultimate conclusion of an effective marketing strategy. How consumers pay for goods and services profoundly impacts the frequency and quality of products purchased. Despite its diffusion and adoption, mostly in developing countries, scant research exists regarding the characteristics of adopters of mobile money. Using the most successful implementation of mobile money globally, M-PESA in Kenya, demographic differences between adopters and non-adopters of mobile money are examined. Data is collected from 1,975 respondents covering all eight Kenyan provinces. Significant differences between the two groups exist for the variables of gender, age, income, education and location (rural versus urban).

Hope or Hype? Five Obstacles to Mobile Money Innovations for Youth Financial Services

cial inclusion has galvanized support and activity all over the world, garnering attention from policymakers, the financial sector, practitioners, and researchers. At the same time, technology, particularly the mobile phone, is increasingly seen as a potential tool to bridge gaps in information, products, and services to poor people worldwide. Services like M-PESA in Kenya have sparked interest and attention around the mobile phone’s potential to accelerate the pace toward global financial inclusion. As a result, there is growing consensus that mobile solutions are an important, effective development strategy. Mobile-enabled solutions to financial access and capability bring hope to those working in youth financial inclusion at a time when existing tools are proving less effective and sustainable than envisioned. Classroom-based financial education has not catalyzed changes in behavior effectively, nor have we yet found a way to make youth financial services sustainable. Inspired by many of the mobile financial service successes for adults, including mobile wallets, mobile payments, and account access for deposits and withdrawals, the youth financial inclusion field sees a way forward. Theoretically, mobile solutions should allow the field to leapfrog many existing hurdles to financial access and experiment with delivery

Branchless and Mobile Banking Solutions for the Poor: A Survey of the Literature

About 2.6 billion people in the world do not have access to formal financial services, and yet one billion of them have a mobile phone. Branchless banking systems take advantage of increasingly ubiquitous real-time mobile communications networks to bring banking services into everyday retail stores, thereby alleviating the lack of banking infrastructure in the communities where poor people live and work. Most of these deployments are quite recent, hence there is a shortage of hard empirical evidence relating to them. However, one mobile banking scheme, MPESA in Kenya, has been phenomenally successful and has been a catalyst for much of the research done to date. In this article, we review the emerging literature on the definitions and model taxonomies employed in mobile banking; the status and drivers of global adoption of these schemes; the take-up and usage patterns of customers and their socioeconomic impact; and, finally, regulatory issues. Our objective is to help policymakers and practitioners in their continued efforts to create an enabling environment for branchless banking.

Scaling mobile money

Retail payment systems require scale to get off the ground and struggle to grow incrementally. This is due to three factors: (i) Network effects: when it comes to payment systems, the value of joining a network is directly proportional to the number of people already on it; (ii) Chicken-and-egg trap: in order to grow, these systems must aggressively attract both customers and cash-in/cash-out merchants in tandem, otherwise, merchants will stop offering the service due to low transaction revenue and customers will not join the system because they cannot access a convenient outlet; (iii) Trust: customers have to become comfortable going to non-bank retail outlets to meet their cash-in/out needs and initiating transactions through their mobile phones. Until a deployment serves a large number of customers, people will lack trust in the new system, because they know few who can vouch for it. To overcome these barriers, mobile money deployments need to reach a critical mass of customers as quickly as possible, lest they get stuck in the ‘sub-scale trap’. To do this, they need to get three things right. First, they must create enough urgency in customers’ minds to learn about, try and use the service. Second, they must invest heavily in above and below the line marketing to establish top of mind awareness of (and trust in) the service among a large segment of the population. And, third, they must incur considerable customer acquisition costs (beyond marketing and promotion) to ensure that their cash-in/out merchants are adequately incent­ivised to promote the service. Many deployments around the world have potential to scale, but are stuck in the ‘sub-scale trap’, because their promoters either underestimate the investments needed to achieve scale or are reluctant to make these investments because they can point to only one major success — M-PESA in Kenya.

On Harnessing the Potential of Financial Inclusion

The development of information and communications technology is opening up the opportunity for providing essential financial services to most people. Indeed, many mobile money or branchless banking schemes are currently spreading across the world. However, these schemes can only be sustainable if they are built on a commercially viable business model. In this respect, the jury is still out. The paper describes one commercially viable initiative in more detail, M-PESA in Kenya, and analyses in detail the transactions involved. It argues that in order to harness the potential of financial inclusion it is vital to permit experimentation with different business models. Regulation is therefore required that enables such experimentation by being calibrated to the type of service offered, but which can be tightened if and when such schemes become bigger with the potential to impact financial stability: risk-proportionate regulation by service type.

Branchless and Mobile Banking Solutions for the Poor: A Survey

This paper reviews the growing literature that has spawned around branchless and mobile banking in developing countries over the last five years. Around 2.6 billion people in the world do not have access to formal financial services, and yet 1 billion of them have a mobile phone. Branchless banking systems take advantage of increasingly ubiquitous real-time mobile communications networks to bring banking services into everyday retail stores, thereby alleviating the lack of banking infrastructure in the communities where poor people live and work. Most deployments are quite recent, and hence there is a shortage of hard empirical evidence relating to them. One mobile banking scheme in particular, M-PESA in Kenya, has shown phenomenal success, and has been a catalyst for much of the research. Here we review the emerging literature in terms of the definitions and model taxonomies employed; the status and drivers of global adoption of these schemes; the take-up and usage patterns of customers, and their socio-economic impacts; and the regulatory issues. Our twin objectives with this paper are to stimulate further research on these questions and to help policymakers and practitioners focus their continued efforts in creating an enabling environment for branchless banking.

The Impact of Mobile Payments on the Success and Growth of Micro-Business: The Case of M-Pesa in Kenya

Micro-business enterprises in the developing world are increasingly deploying the use of mobile payments to enhance the quality of their services and increase growth. The pace of transformation in the micro business sector has speeded up with more micro businesses realizing the potential of using the mobile payments in their service delivery. However, there are only a handful of studies on the application of digital technology for success and growth on micro business.This paper aims to investigate the success factors attributable to the use of mobile payments by micro-business operators. The study is based on a survey conducted through administration of questionnaires. The data was collected from a sample of 409 micro business entrepreneurs in Nairobi, Kenya. The study applies the Theory of Technology Acceptance Model (TAM) which was extended to include other factors to help us predict success and growth in micro-businesses. Analyses of the data reveal that convenience of the money transfer technology plus its accessibility, cost, support and security factors are related to behavioral intention to use and actual usage of the mobile payment services by the micro businesses to enhance their success and growth.Keywords: Mobile payment, M-Pesa, micro business, technology acceptance, business success.

Designing Mobile Money Services: Lessons from M-PESA

This paper presents ten key service design features that have facilitated the rapid adoption and active use of M-PESA in Kenya. These relate to branding and messaging, ease of use, consistency of customer experience, agent monitoring, instantaneous customer registration, free deposits, ability to send money to non-registered customers, and agent channel growth.

Banking the Unbanked Using Prepaid Platforms and Mobile Telephones in the United States

The rapid growth of mobile phone usage and the continuous rise in wireless coverage fuel the expectations that access to financial services trough mobile phones could transform the way financial services are provided. The emergence of new and more efficient business models, can potentially resolve supply inefficiencies that explain the large unbanked population that exists in the USA, much larger than in most developed countries. Nearly 40 million US households (approximately 73 million people) are financially underserved (CFSI, 2007), of which 15 million households (approximately 28 million people) are totally unbanked. This problem is explained by the non adequacy of the value proposals offered by financial institutions to the demands of the US customers. The areas of poor alignment refer mostly to the design of products and the marketing and distribution networks used. To resolve these misalignments, this paper will argue that business models based on prepaid cards as products and mobile phones as transactional and distribution channels could be used in order to close the supply gap. We will call the business model proposed based on prepaid products and mobile phones mobile banking, since these two elements are the basis of the business model used companies such as Smart Money and G-Cash in the Phillipines, Wizzit in South Africa and M-Pesa in Kenya.

Exploring the usage and impact of “transformational” mobile financial services: the case of M-PESA in Kenya

Since its introduction in March of 2007, the M-PESA application has grown rapidly, acquiring a user base of over seven million and an agent network of over ten thousand. Because of its rapid growth, the application has received a significant amount of attention. There have been assertions that it can engender transformational benefits by providing the unbanked with new opportunities to access financial services. There is, however, very little discussion of what these transformational benefits are and how they are brought about. This paper will contribute to filling this gap in the literature. It draws on ethnographic fieldwork conducted over fourteen months in two locations – an informal settlement near Nairobi and a farming village in Western Kenya. It will show that the M-PESA application was utilized for the cultivation of livelihood strategies. Such strategies helped residents to cope with (temporarily adjust) and recover from (longer-term shifts in livelihood strategies) stresses and shocks. It will also explain the outcomes resulting from these strategies. In particular, it will show how M-PESA was utilized for the solicitation and accumulation of financial assets and the maintenance of social networks. Attention will also be given to some of the negative outcomes, or unintended consequences, that were generated through usage.

Mobile phone-enabled payment systems - transformation 2008

The widespread use of the mobile phone has offered a gateway for handling financial transactions. After a number of years where innovative products in developed markets stalled, there are now a number of innovations that have found traction in developing markets. There are also alliances and products that were launched in 2007 or due for launch in 2008 that will potentially change the landscape of m-banking and m-payments. The article offers a quick overview of the emerging innovations, considering innovative products like M-Pesa in Kenya. It looks at lessons learnt so far, how the markets in developing economies might respond to the new propositions, and what might influence the creation and take-up of m-payment products.