MICROFINANCE PAPER WRAP-UP: An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem; By Jake Kendall, Bill Maurer, Philip Machoka and Clara Veniard; Published by University of California Irvine School of Law

By Jake Kendall, Bill Maurer, Philip Machoka and Clara Veniard; published by UC Irvine School of Law; May 2011; 15 pages; available at: http://ssrn.com/abstract=1830704

This research paper examines the question: “Has M-Pesa achieved the scale necessary to form an infrastructure backbone to Kenya’s financial system?” The authors investigated approximately 90 financial institutions in Kenya to evaluate whether the Kenyan retail electronic payment system is in the early stages of transformation to a network infrastructure for the exchange of cash and electronic value between various economic actors including clients, businesses, the government and financial service providers. Additionally, the authors considered whether Safaricom’s M-Pesa mobile money product has achieved the scale necessary to form an infrastructural backbone to the Kenyan financial system.

The authors’ investigation indicates (a) that there is significant integration of mobile money into the products and services offered by financial institutions in Kenya; (b) that an ecosystem of firms have sprung up to facilitate the technical integration of existing financial institutions’ back-end systems with the new mobile money platform; and (c) that there are a number of innovative new businesses which operate solely over the mobile money platform [1].

Despite these findings, the authors also identify significant barriers to a more fully developed ecosystem. They include (a) money transfer pricing that the authors deem high; (b) the difficulty of integrating with mobile money interfaces, especially that of M-Pesa, and; (c) that firms wishing to outsource their day-to-day cash transactions with clients to the mobile money system must find new opportunities for interactions with their clients to reinforce rapport, build trust, educate and cross-sell new products [1].

By: Alexandra Pattee, Research Associate

About M-Pesa: M-Pesa is a Kenyan cellphone-to-cellphone cash transfer service. The M is for “mobile” and “pesa” means “cash” in Swahili. Launched in 2007 by Safaricom Limited, a Kenya-based cellphone service provider, M-Pesa was developed by Vodafone Group Private Limited Corporation, a British multinational mobile network operator, as part of its strategy to reach poor people with new goods and services. As of March 2010, M-Pesa reports having 15.7 million subscribers.

Sources and Resources:

[1] UC Irvine School of Law, “An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem”, http://ssrn.com/abstract=1830704

MicroCapital.org Article, November 11, 2010, “Survey on Kenya’s M-PESA Mobile Transfer Service Shows Increased Impact in 2009”, https://www.microcapital.org/microcapital-brief-survey-on-kenyas-m-pesa-mobile-transfer-service-shows-increased-impact-in-2009/

MicroCapital.org Article, “Saving Through the Mobile Phone: The Case of M-PESA, by Olga Morawczynski, Published by Microfinance Information Exchange (MIX)” by Matthew Fox, 28 September 2010
https://www.microcapital.org/microfinance-paper-wrap-up-saving-through-the-mobile-phone-the-case-of-m-pesa-by-olga-morawczynski-published-by-microfinance-information-exchange-mix/

MicroCapital.org Article, August 16, 2010, “Microfinance Reach Expands in Kenya As Safaricom Capitalizes on Kenyan Government Requirement to Register All Mobile Phone Users”, https://www.microcapital.org/microcapital-brief-microfinance-reach-expands-in-kenya-as-safaricom-capitalizes-on-kenyan-government-requirement-to-register-all-mobile-phone-users/

MicroCapital’s Microfinance Universe profile: M-PESA
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=M-Pesa

Browse MicroCapital’s Universe and add your entry to the wiki at:
https://www.microcapital.org/microfinanceuniverse/

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