Experts have described mobile money as the future of banking. The success story of Safaricom’s M-PESA service in particular, has had many pondering on the factors that have led to its unparalleled achievements.

Perhaps the most outstanding reason would be; the cell phone operator (Safaricom) offers banking services to previously unbanked customers. “Where previously people with no access to banks would have had to rely on cash, even for sending money far distances, they can now transfer money more securely via their cell phones” African Business Review reported. Auditing firm Ernst and Young was put on record on July 8, 2011 saying, “Mobile money represents greater convenience to end users as payments move away from paper transactions.” “Setting up a bank account on your phone is straightforward. All you do is register with an approved agent, provide your phone, along with an ID card, and then deposit some cash onto your account” BBC reported. Actually, what has stimulated the success of mobile banking in Kenya is the fact that banks append high transaction fees per transaction, on one hand, thus, as the past head of M-PESA Business Operations, Pauline Vaughan, said, it is that gap in the market that mobile phone banking is targeting, on the other hand. However, users of the M-PESA service are “allowed to send up to Sh70,000 in a single transaction, meaning that they incur double transaction charges to send the daily limit” of Sh140,000. In an email response to the governor of Central Bank of Kenya-Njuguna Ndung’u, early this year, Bob Collymore, Safaricom’s CEO, said that, “the company has been working closely with the CBK on transaction charges for M-PESA.” That aside, “an agreement signed at the end of March 2011 with Western Union, the US firm specializing in money transfers, allows funds to be transferred to mobile phones with an M-PESA account from 80,000 Western Union agencies in 45 countries” Proxima mobile reported.

Safaricom partners with Western Union

Well, some will argue that it is an expansion of an already successful, stand-alone service, but I look at it as a leeway for western contamination of a wholly indigenous innovation. Which side of the bread is buttered?

What’s Your Say?

References:

Africa sprints ahead with mobile banking African Business Review August 9, 2011

Marketing mobile money The Citizen July 8, 2011

Kenya’s M-PESA mobile payment service goes international Proxima mobile May 19, 2011

Africa’s mobile banking revolution BBC August 12, 2009

Cut Transfer Costs, Central Bank Tells Mobile Phone Firms in Kenya Balancing Act February 4, 2011