M-Pesa Services in Kenya

The most popular mobile money service in Africa and the biggest fintech platform is M-PESA. Due to its unparalleled simplicity and high level of security, M-PESA is the preferred method of payment for both banked and unbanked individuals across the continent. Millions of individuals with mobile phones but no bank accounts or restricted access to banking services are also served by it in terms of financial services. In seven African nations, M-PESA now offers more than 51 million users a cost-effective, safe, and convenient method to send and receive money, top-up airtime, pay bills, get paid, acquire short-term loans, and do much more.

With more than 604,000 active agents operating in the Democratic Republic of the Congo (DRC), Egypt, Ghana, Kenya, Lesotho, Mozambique, and Tanzania, M-PESA was launched on March 6, 2007, by Safaricom, a Kenyan affiliate of Vodafone. Early in 2020, a newly formed joint venture between Vodacom and Safaricom and Vodafone Group successfully acquired the M-PESA trademark. The joint venture will hasten the expansion of M-PESA throughout Africa by providing both Vodacom and Safaricom complete control over the M-PESA brand, product development, and support services, as well as the chance to expand M-PESA into new African markets (Vodafone).

According to Vodafone, customers deposit cash in return for electronic money after registering for the service at authorized agents, who are frequently tiny mobile phone stores or other merchants including barbers, butchers, and bakers. Then, customers may transfer money to their relatives or friends anywhere in the nation. Customers may now transmit money to other network users of mobile money in the majority of markets. Customers can transfer and receive money instantly across borders thanks to international remittance partners.
M-PESA Customers develop credit histories that allow them to apply for loans from bank partners. In Kenya and Tanzania, respectively, there are products called M-Pawa and KCB M-PESA. Xitique in Mozambique, M-Koba in Tanzania, Mokhatlo in Lesotho, and M-Shwari in Kenya are just a few of the great individual and group savings programs available to M-PESA users. Savings accounts help to improve our clients’ credit ratings, enhancing their ability to receive financial services.

Customers can use an overdraft option on M-PESA to help them make payments when their account balance isn’t nearly adequate. The size of their overdraft might increase with a higher credit score. To provide clients with the finest service possible even when they have limited float, agents also have access to an overdraft.

Customers can invest in wealth management funds based on their level of risk tolerance and boost the returns on their assets. Customers of M-PESA can contribute to insurance plans to protect themselves from unforeseen circumstances or financial shocks. They provide insurance solutions through their partners that cover companies, health, agriculture, technology, transportation, and funerals.

Additionally, real-time money transfers are available for customers and agents between their M-PESA wallets and bank accounts. Through their M-PESA business accounts, firms may accept payments for goods and services using 6-digit till numbers, QR codes, point-of-sale devices, or digital invoicing.

Additionally, M-PESA organizations have all the tools necessary to manage their money and inventory, whether they are using a PC or a smartphone. Through the interface, businesses may manage subscriptions, set up regular payments, track sales and expenses, pay bills, send invoices, purchase goods, get credit, and much more.

Finally, the M-PESA Open API hub enables programmers to securely test and implement M-PESA services on platforms from other companies. By purchasing premium advertising space on the M-PESA customer and business applications, businesses may increase traffic and engagement. A vast ecosystem of third-party services is created by the M-PESA customer and corporate super applications. The mini-app capability exposes a wide range of new services to M-PESA clients as well as a sizable customer base to the mini-app partners, whether it be for e-commerce, travel, events, or business services.

12 of the 17 Sustainable Development Goals of the UN are achieved in part thanks to international remittances. It has been demonstrated, for instance, that a 10% increase in remittances per capita results in a 3.5% decrease in poverty (United Nations, 2020). M-PESA is the recipient of over US$1.5 billion in remittances annually, including 60% of official remittances into Kenya and 20% into Tanzania. M-PESA can do this thanks to strong partnerships with top money transfer companies like Western Union, MoneyGram, World Remit, Remitly, and MFS Africa.

President Kenyatta stated in July 2015 that “M-KOPA has provided solar illumination benefits to thousands of rural families, enabling our children to study and freeing our mothers from the stress of bringing firewood and burning kerosene late into the night.” Most homes cannot afford the initial purchase of the solar system, but M-PESA users make tiny daily payments to M-KOPA to cover the cost of the kit over the course of a year. After then, the homeowner completely owns the solar system and is free to keep using it without having to make any more payments.

The World Food Programme wanted to boost the local economy in the Dadaab and Kakuma refugee camps and lessen reliance on costly logistics for distributing food aid that was brought in from overseas. The World Food Programme (WFP) employed the M-PESA closed loop system, which restricted the expenditure of aid to certain merchant locations, to verify that the food aid vouchers they were delivering to more than 500,000 individuals in 125,000 homes were used as intended for food and water. Over 500,000 refugees and neighborhood business owners living in the Dadaab and Kakuma camps have seen significant improvements in their quality of life and financial security owing to their relationship with WFP.
G4S had trouble paying its dispersed security personnel in the Democratic Republic of Congo (DRC). Local managers would travel to outlying locations to pay staff in cash in person, posing a serious security risk to both themselves and their workers. G4S was able to quickly and in large amounts pay its personnel via M-PESA to their mobile phones. This was also involved in Kenya’s social protection program during lockdowns (Vodafone).

The Kenyan telecom Safaricom’s M-PESA service has established itself as its most lucrative offering and now accounts for approximately half of all gross revenues generated by the business. According to Safaricom’s brand-new 2022 annual report, which for the first time detailed the portion of income related to the mobile money platform, this is the case. Despite only making up 38% of the Kenyan operator’s total service revenue, M-PESA’s profit before taxes for the fiscal year that ended on March 31, 2022, was 50 billion Kenyan shillings (US$423 million), or over 50% of the telco’s total profit before taxes of KES102.2 billion ($865 million). M-annualized Pesa’s revenue increased by 30.3% (YoY) to KES107.69 billion (US$911 million).

With competing mobile money systems from carriers and local fintech trying to catch up to its success, the fintech platform, which is now 15 years old, shows no signs of slowing down. In Kenya, M-PESA has 30.53 million active users, an increase of 7.8% over the previous year when there were 28.31 million users. Additionally, M-PESA users worldwide increased 19.8% YoY to 985,762 at the end of March 2022. (Gilbert, 2022).

The yearly report stated that the “uptake of mobile money services continued to expand since their convenience and cashless character was regarded as helping to restrict the spread of COVID-19.” As a consequence of the epidemic forcing customers to use online and mobile money payment methods, the Kenyan ICT sector has, in general, seen strong development. According to the research, M-PESA handled 2,000 transactions per second during the most recent fiscal year as opposed to 1,800 transactions per second during the year before.

According to reports, over the last year, it has facilitated 15.75 billion transactions using M-PESA, worth KES29.55 trillion ($250 billion). This is a significant increase over the 11.68 billion transactions in 2021, at KES22.04 trillion ($186 billion). M-PESA is currently accepted by more than 3.2 million companies in Kenya, up from 2 million in 2021, and there are over 492,700 active Lipa Na M-PESA merchants, which is about 200,000 more than a year ago.

According to the operator, 41% of Kenyans were completely excluded from access to financial services 15 years ago, and before the launch of M-PESA, only 27% of the country’s population had access to formal financial services. However, 32% had access to informal financial services, including loans from unregulated money lenders. Kenya now has the third-highest level of formal financial inclusion in Africa, up from just under 30% in 2011 to over 80% in 2021, according to a statement from Safaricom.

A new approach, unveiled by the CEO Peter Ndegwa, is intended to distinguish them apart from the competition. The appointment of Sitoyo Lopokoiyit as the new Managing Director of M-PESA Africa is indicative of the future. The goal is to launch the appropriate talent sourcing procedures to quickly find and choose the next Financial Services leaders. He is also in charge of Product Management & Development for both Consumer & Enterprise, as well as New Business Ventures. In conclusion, you can anticipate a lot from the new leadership and M-PESA overall (Onamu, 2021).
Safaricom has consistently outpaced its competitors in developing innovative services for its clients, and this may be due to the peculiar circumstances of the nation at the moment. Kenya’s younger population is more aware of global market trends and is the engine behind one of the continent’s most thriving e-commerce ecosystems (Maudhui Newsroom, 2022).

According to Statista, the Kenyan e-commerce business has had consistent development and is projected to reach an estimated market volume of $2 billion by 2024. Despite the lack of precise statistics for home e-commerce usage, a 2016 National ICT survey conducted jointly by the Authority and the Kenya National Bureau of Statistics (KNBS) found that 39% of commercial firms were involved in e-commerce (Maudhui Newsroom, 2022).

Anyone with a mobile phone may enter a virtual store, pick what they want to buy, and pay using their Kenyan shillings’ account on their mobile wallet thanks to the recently introduced M-PESA Global. Using M-PESA GlobalPay, a virtual VISA card connected to your M-PESA account, you may make payments to worldwide online retailers like Netflix, Amazon, AliExpress, and others.

I can verify that out of all the things Safaricom offers, including its extensive array of phone and SMS services, data bundles, and home fiber, I value M-PESA the most. So many processes were stalled before the product. But since the company’s founding in 2007, it has put a lot of effort into the product, and as a result, its prospects are quite promising.

REFERENCES:

  • Burns, S. (2015). Mobile Money and Financial Development: The Case of M-PESA in Kenya. SSRN Electronic Journal.
  • Edwards, S., Johnson, S., & Weil, D. African successes.
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  • Kingiri, A., & Fu, X. (2019). Understanding the diffusion and adoption of digital finance innovation in emerging economies: M-PESA money mobile transfer service in Kenya. Innovation And Development, 10(1), 67-87. 
  • M-PESA – Vodafone.com. 
  • M-PESA and Kenya: Why Mobile Money Matters? | Cornell Johnson. 
  • Nery, D. (2021). Explaining the success of a multinational company’s innovation in the base of the pyramid: M-PESA in Kenya. Independent Journal Of Management &Amp; Production, 12(2), 526-556.
  • Osah, O., & Kyobe, M. (2017). Predicting user continuance intention towards M-PESA in Kenya. African Journal Of Economic And Management Studies, 8(1), 36-50.
  • Park, E. (2020). ‘Human ATMs’: M-PESA and the expropriation of affective work in Safaricom’s Kenya. Africa, 90(5), 914-933.
  • Townsend, S., & Dagada, R. Vodacom M-PESA.
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