Mobile Money Transfer Service Puts More Cash in Consumer’s Pockets

Who is doing it: Kenyan telecom provider Safaricom offers the M-Pesa mobile money transfer service to its 12 million subscribers. Shopkeepers, banks or other business owners can register as agents who accept deposits, dispense cash or use their phones to debit customers’ accounts. For example, Mama Wanja, a business owner who runs a shop in central Kenya’s Thika district, extends credit to customers and debits their M-Pesa accounts when it’s time for them to pay their bills.

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How it works: Individuals or financial institutions can send money electronically to M-Pesa or make cash deposits through an agent. Safaricom charges a commission for transfers based on the amount of the transaction, but a deposit is free. The commission is then divided between Safaricom and the agents. There are five million registered M-Pesa users; individuals who are not registered can still use the service, but pay more for it.

Growth Potential: Too early to tell. In its first six months (ending last September), M-Pesa had yet to break even. John Kamau, general manager of NetLink Limited, a retailer of mobile devices and services, thinks fees for the service will drop and the market will expand once other mobile providers in Kenya launch their own money transfer services.