Friday, October 5, 2012

M-Pesa: Kenya’s Largest Bank?

With 28,000 branches across Kenya, does M-Pesa truly qualify as Kenya’s largest bank?

By: Ringo Bones

Believe it or not, only a few Kenyans have a permanent bank account because most of them probably can’t set aside the minimum amount of cash needed to open and maintain one and that said amount of cash is better spent in starting up a small business. But why is it that almost every Kenyan who owns a mobile phone had at least once availed the services of M-Pesa?

To the uninitiated, M-Pesa is an online service system that allows Kenyans with a mobile phone or a PC connected to the internet and an M-Pesa account to be able to send and receive money and be able to pay their utility bills online. As a money transfer scheme, it looks like M-Pesa is running unopposed in Kenya. And despite having 28,000 branches across Kenya, M-Pesa can’t be considered a bank in the strictest sense unlike its traditional bricks and mortar counterpart.

Started back in 2007 as a brainchild of Safaricom to test whether the fledgling high-speed internet infrastructure of Kenya is viable for e-commerce use, M-Pesa has since then became a runaway success in a country where most people with regular source of income don’t have bank accounts but possess their own mobile phones or can access the internet. And despite the perennial problems of cable theft which could disrupt local internet traffic for days on end, Kenyan’s seem to pledge allegiance to M-Pesa as their online bank of choice.

And by October 2012, M-Pesa could be made more secure because the Kenyan communications commission will ban counterfeit mobile phones to avoid e-commerce fraud that could potentially ruin every Kenyan’s trust of the M-Pesa system. This move by the Kenyan government not only safeguards long-term M-Pesa users, but also could attract tourists visiting Kenya to potentially avail the online payment conveniences of M-Pesa. 

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