The business model also seems to be sustainable for safaricom. Model performance evaluation and scenario analysis mpesa. T his presents a wholly incomplete picture of the role that mpesa pla ys in the lives of kenyas poor. The tool was developed specifically for the hydrological simulation programfortran hspf and the stormwater management model swmm models. Much is now written about mpesa on its business model and extent of its use at the household and community levels. Mpesa is not actually a company but a product offered by the kenyan telecommunications giant safaricom. Pdf an analysis of mpesa use in international transactions. M pesa as a payments and money transfer platform was developed jointly by safaricom, a telco company, and the commercial bank of africa. Recently the company announced that m pesa now has more than a million customers transferring usd 12. Click here to know more about safaricom annual reports. E40,o16,o33 abstract mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. Transforming millions of lives telecom circle the economic impact of mobile phones is a well talked about fact but the role of mobile phones in remittances and money circulation can be far greater.
Mmoney channel distribution case tanzania vodacom tanzania mpesa public disclosure authorized. Practitioners insight mpesa a success story of digital. M pesa was originally introduced in kenya as an alternative way for the unbanked. Mpesa and the rise of the global mobile money market. Bank business models bank for international settlements. Mpesa a success story of digital financial inclusion by njuguna ndungu, associate professor of economics, university of nairobi and former. In essence, m pesa is a persontoperson p2p money transfer system that allows individuals to make payments and send remittances. This translation was not created by cgap and should not be considered an official translation. Most people and small businesses in emerging economies today do not fully participate in the formal financial system. Much is now written about m pesa on its business model and extent of its use at the household and community levels. Mmoney channel distribution case tanzania vodacom tanzania. Because it takes agents a couple months to ramp up at their branch by attracting mpesa customers and convincing them to start transacting, the business model of mpesa incurs significant upfront costs and is one of the reasons many mobilemoney deployments fail in the early days. Customers can also use mpesa to transfer money in and out of accounts at 14 banks.
Mpesa can facilitate easier movement of money across the globe. Mpesa was originally introduced in kenya as an alternative way for the unbanked. Ignacio mas and dan radcliffepesa is a smallvalue electronic payment and storeofvalue system in k enya accessible from ordinary mobile phones. Financial services for the underbanked contributed by. The first section is written by nick hughes, a vodafone executive who started this project in 2003 and now heads a mobile payments team with the task of growing the business. You can view full annual reports for the past few years by clicking on the below links.
Most people probably dont think of kenya as an innovation and technology hub, but in 2007 it became the launching pad for mpesa, a transformative. Acceptance model tam to get a better understanding of the micro business entrepreneurs. Learnings from mpesa in kenya and tanzania for the unbanked. For example, south africas wizzit has managed to attract 250,000 customers in more than four years of operation. We examine how mpesa is used as well as its economic. M pesa business model canvas click to enlarge m pesa is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania. The impact of mpesa in kenya isaac mbiti and david n. Unlike mpesa, whose primary business model required customers to transact via a mobile wallet linked to the safaricom simcard on their mobile phones, zoonas platform could be accessed via physical agents who would process transactions on behalf of consumers. Jul, 2014 m pesa is not actually a company but a product offered by the kenyan telecommunications giant safaricom. Today, as it faces new challenges, it has 30 million users in 10 countries and three continents.
The legal framework for microfinance had been approved by the parliament, but guidelines also had to be approved by. M pesa has spread quickly, and by 2010 had become the most successful mobilephonebased financial service in the developing world. Mpesa business model canvas click to enlarge mpesa is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania. M pesa can facilitate easier movement of money across the globe. However, the success of mobile money services more broadly has been limited in its 2012 mobile money adoption survey of mobile money services in. Mpesa is a microfinance service and an smsbased money transfer scheme, which allows registered users to make payments, deposit cash, transfer cash, withdraw cash, and borrow cash using inventive mobile phone technology. Feb 21, 2017 the m pesa mobile payment system was launched in kenya in 2007. The impact of mobile payments on the success and growth of microbusiness. Father of mpesa michael joseph, former safaricom ceo, talks to cnns richard quest about the future of banking and how kenya is positioned to lead once again. Chapte r 20 mobile payments go viral mpesa in kenya. Neighboring tanzania launched its own version of mpesa in april 2008, but it has only recently crossed the 100,000 customer mark.
Financial services for the underbanked contributed. Mmoney channel distribution case kenya safaricom m. In fact, the reach of models such as mpesa can enable and even incentivize innovation in the banking sector, including a shift in focus to increasingly lowerincome consumers. Prior to m pesa, mobile phone customers had engaged in trading prepaid airtime. One year after the kenyan launch, vodacom launched mpesa in april 2008 in tanzania. The mpesa mobile payment system was launched in kenya in 2007. While mpesa is primarily known for facilitating peertopeer money transfers, lending is also a major part of the business model of the platforms parent company safaricom. Now in use by 9 million customers40 percent of kenyas adult. Mpesa is not the only mobile money service to be launched in africa, but it is the most successful.
A mobile banking service that allows users to store and transfer money through their mobile phones. Jun 14, 2019 t his presents a wholly incomplete picture of the role that mpesa pla ys in the lives of kenyas poor. The model performance evaluation and scenario analysis mpesa tool was developed to provide users with the ability to assess the performance with which models predict time series data e. To answer your questions simply, transaction fees a. What makes a successful mobile money implementation. Translationsif you create a translation of this work, add the following disclaimer along with the attribution. Mpesa is a case study that is studied and quoted in one form or another by. Mobile money for the unbanked turning cellphones into 24hour tellers in kenya two authors have written this case study, each taking up one part of the story. The curious case of mpesas miraculous poverty reduction. Safaricom annual reports, full annual reports safaricom.
Vodacom mpesa in south africa, mtn mmoney in uganda, eko financial services in. Many mobile network operators have been eager to repeat mpesas success in kenya, but the formula for this success is not yet clear. M pesa business model canvas m pesa is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania. The case of mpesa in kenya marion mbogo abstract microbusiness enterprises in the developing world are increasingly deploying the use of mobile. Aug 12, 2015 most people probably dont think of kenya as an innovation and technology hub, but in 2007 it became the launching pad for mpesa, a transformative mobile phonebased platform for money transfer. Mpesa offers clients a mobile wallet with the functionality to transfer money and pay bills. Mpesa has more than 21,000 agents managed by several hundred anms and million registered customers more than half the adult population. Mmoney channel distribution case kenya safaricom mpesa. M pesa is an agentassisted, mobile phonebased, persontoperson payment and money transfer system in kenya. The changes include a simpler pricing model, a more targeted educationbased marketing campaign, and. In mpesas case, especially for kenya, necessity is the mother of all inventions, in this case, mother of all adoption. The user uptake of the service in tanzania has been much slower compared to its northern.
Mpesa can enable and even incentivize innovation in the banking sector. M pesa was the first product of its kind to be introduced in kenya and is generally viewed as a successful implementation that should be used as a model for other developing countries. So what exactly does one need in order to open an mpesa shop. The new products created by kenyas banks in the wake of mpesa have driven change in banks business models, including a shift in focus to increasingly lower income consumers. Mobilemoney becomes profitable only when it goes viral.
M pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. The changes include a simpler pricing model, a more targeted educationbased marketing campaign, and the introduction of an aggregator model to better manage and support its distribution network. Customers can also use m pesa to transfer money in and out of accounts at 14 banks. On the bottom line, mpesa built on their existing mobile credit sellers, turning them into mobile money agents with very limited investment and additional costs. The spectacular success of safaricom mpesa offering, driven by a captive peculiar mobile service customer base, the roll out and management of mpesa agents outlet coupled with a gamble in terms of strategy that was singularly executed, has given rise to a service that is the envy of many and the fear of even more. Mpesa and access to health in kenya the most common way one hears kenyans refer to mpesa in relation to health care is as emergency moneyfunds received quickly to obtain immediate necessary treatment. M pesa offers clients a mobile wallet with the functionality to transfer money and pay bills. Why is there no mpesa like system in europe while it is. Mpesa is an agentassisted, mobile phonebased, persontoperson payment and money transfer system in kenya. The contribution of m pesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant. Mpesa was the first product of its kind to be introduced in kenya and is generally viewed as a successful implementation that should be used as a model for other developing countries.
Since 2007, kenyas mpesa has revolutionized the way people spend, save, and send money. The impact of mobile payments on the success and growth. Launched in kenya in march 2007, mpesa signed up 20,000 customers in its first month, 2 million by the end. The first is to define and characterise banks business models.
Like any business, running an mpesa shop is very profitable and with the right knowhow of its operations and with the right approach, this is one business you can make a fortune out of. In fact, if we look back at the history of mobile payments were actually playing catch up. Mpesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. Kenyas experience shows, above all, that retail banks can thrive in the face of mobile money, as long as they are prepared to adapt. The contribution of mpesa to deepening financial inclusion for the poorest socioeconomic groups in kenya is significant. We identify a small set of key ratios that differentiate banks business profiles and use a broader set of variables to provide a more complete characterisation of these profiles. The essence of the product is to enable transfer of emoney using a basic mobile phone. Nov 01, 2018 father of m pesa michael joseph, former safaricom ceo, talks to cnns richard quest about the future of banking and how kenya is positioned to lead once again. Mpesa is a mobile phonebased money transfer, financing and microfinancing service, launched in 2007 by vodafone for safaricom and vodacom, the largest mobile network operators in kenya and tanzania. Business school, michael tarazi cgap, and ignacio mas. Vodacom tanzania is a subsidiary company of south african vodacom group pty limited who owns a.
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