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M-PESA: Developed in Kenya & Now a Leader in the World Mobile Money Transfer

With the wave of ‘Demonetization in India’, there has been a sweeping flow of Apps and Websites that offer money transfer provisions. But being a ‘Cashless Society’ is still considered as a far fetched dream. On the contrary, a country like Kenya has not just strived to become ‘Cashless’ almost 7 years back, but as of today it is a living example of this change – which helped their society and infrastructure system, at large.

True that most people probably don’t think of Kenya as an innovation and technology hub, but in 2007 it became the launching pad for M-Pesa, a transformative mobile phone-based platform for money transfer and financial services.

Since then, M-Pesa has undergone explosive growth:

In 2013, a staggering 43 percent of Kenya’s GDP flowed through M-Pesa, with over 237 million person-to-person transactions. M-Pesa is nearly ubiquitous in the daily lives of Kenyans due to a range of services that include money deposit and withdrawal, remittance delivery, bill payment, and microcredit provision.


While a majority of Kenyans don’t have a bank account, eight in 10 have access to a cell phone. So in 2007, Safaricom (A mobile company) started offering a way to use that cell phone to send and receive cash. They call it M-PESA: m stands for “mobile;” “pesa” is money in Swahili.

It is often referred to as Kenya’s alternative currency. But safer and more secure.


To get this currency you go to an M-PESA kiosk. I give the agent 3,000 shillings — about $30 in cash, and she converts it to virtual currency on my account.

There are 85,000 agents like her across Kenya, creating a giant grid of human ATMs. For most this is a side business: so a pharmacy will sell M-PESA or a roadside spice shop; this barber will give you a shave and M-PESA.



Scrolling down the options on the phone menu: you can send money, withdraw cash, pay a bill, or buy goods and services. And everyone uses a PIN number for security. But this is not like paying with your smartphone in the U.S., because our devices are linked to a bank account or credit card. Most Kenyans who use M-PESA don’t have a bank account: the phone is it.



M-Pesa’s impact in Kenya put mobile money services on the map, and the subsequent proliferation of similar services can be credited to this success. According to the Global Mobile Systems Association (GMSA), approximately 255 mobile money services were operating across 89 countries in 2014.

While M-Pesa and other services like it do expand opportunity and financial inclusion, mobile transfers are not a complete answer to fully participating in formal financial systems.

M-Pesa only allows for relatively small amounts of money to be stored and transferred via mobile phones and can’t substitute for opening a bank account or getting a loan for a small business.

By enabling users to transfer money to each other and make payments directly to businesses and service providers, mobile money platforms cut down on corruption by reducing the need to operate in a cash-only economy. As a result, M-Pesa’s empowers individuals and supports entrepreneurial creativity in a less constrained financial marketplace.