M-pesa is an innovative technology that enables one to send and receive money from virtual wallets through the SIM card. More than a money transfer innovation, M-pesa is payments solution provider, financing solution provider as well as a banking solution to millions of Kenyans.
As of the end of 2021, there were some 50million registered M-pesa users. Given that Kenya has a population of 45million, it means M-pesa has a penetration rate of 111%. For every Kenyan, there is a registered M-pesa line.
The M-Pesa Business Model
The m-pesa business model operates by hierarchical order that resembles a pyramid. At the apex are the banks that provide the authorized agents with bulk cash transactions. Here the transactions run into millions of shillings.
At the lower level are the dealers who will deal with the banks. A dealer may have several registered agents under him. He is the ‘banker’ of the agents. The agents are widely distributed and deal with transactions in their thousand. They are the ‘bankers’ of sub-agents. The subagents are mostly the people who are on the lowest level and they deal directly with consumers.
At the subagent levels, the transactions are to the lowest denominations of 50 shillings. The subagent will receive cash from a customer for deposits and will avail cash to the customer withdrawals.
M-Pesa Impact To The Society
Before the advent of M-pesa, many Kenyans were unbanked and relied on home banking for the safekeeping of money. The M-pesa innovation has changed that through the following ways:
1. M-Pesa Has Provided A Safe And Efficient Way Of Storing Money
You do not need to hold currency in notes but you easily hold the money in a digital wallet. Money especially paper money is cumbersome to keep as it will deteriorate with time due to moisture, dust, and general action of vagaries of weather.
2. M-Pesa Has Provided A Safe Way To Transfer Money
With the ability to send several hundred thousand shillings a day, it is extremely easy to transfer money from one m-pesa wallet to the other. Banks have embraced the technology and connected the customer bank account to their m-pesa account making it possible to transfer funds to banks and from bank account to m-pesa.
3. M-Pesa Has Helped In Mobilizing Savings
M-pesa has revolutionized the way Kenyans mobilize savings by providing features within the M-pesa wallet where one can save funds and even lock funds for a particular duration of time. This is possible through products like m-shwari and KCB M-pesa
4. M-Pesa Has Made It Possible For A Cashless Payment System
While the Americans have the card payment system, Kenyans have an M-pesa payment system. In this system, the vendor registers with M-pesa and is usually given a unique identifier account, through which they can receive payments from M-pesa. The accounts are called till numbers and paybill numbers. The payment system is available to the vegetable vendor, to doctors, and even to the government payment system.
5. M-Pesa Has Made The Unbanked Access Banking Services
M-pesa has greatly improved the financial inclusivity of all Kenyans especially women into the financial system. You do not need any particular knowledge to operate an M-pesa account. Registering for m-pesa is free and the account attracts no charges as long as no transaction is carried out.
The transaction charges to lower transaction amounts are so low and sometimes non-existent to make it affordable even to the lowest member of society. For example, it will cost nothing to send shillings 100 through M-pesa.
Access to credit has been enhanced through Fuliza and other mobile based loans. Small business owners have been able to boost their businesses and grow the levels of income they get.
6. Social Unifying Tool
Besides, the financial aspect of m-pesa has become a strong pillar that has united society, strangers and helped people pool together their resources for a noble cause such as mobilizing funds for hospital bills, funeral expenses, wedding expenses, etc.
Monopolistic Tendencies Of Safaricom M-Pesa
There has been a strong debate on the dominance of M-pesa in the money transfer and payments markets to the exclusion of other service providers.
The market dominance of m-pesa is in no doubt having control of 98.69% of the market. This has come at a cost with Safaricom being accused of locking in M-pesa customers to its network.
This is very apparent in the transactions regime where it will cost 12 shillings to send 1,000 shillings to a registered m-pesa user while it will cost 49 shillings to send money to non-Safaricom M-pesa user.
There have been several attempts to bring legislation to the parliament to break up M-pesa, but all have not been successful so far.
See also:
- Is Fuliza A Loan Or A Credit Facility?
- How To Check Fuliza Limit
- Cooperative Bank Of Kenya Branch Codes
- How Much Do M-pesa Agents Earn?
- How To Get M-pesa Statement
- How To Reverse M-pesa Transaction
- How To Buy Airtel Airtime From M-Pesa
- How To Link PayPal With M-Pesa
- M-Pesa Transaction Charges
- M-pesa Paybill Charges
- What Is Fuliza?
Final Thoughts
M-pesa is no doubt a great innovation and its impact on society will last several decades to come. M-pesa has enabled the least banked in society to access banking services and enjoy the fruits of innovation.
