M-PESA is the Model for Perhaps 60 Other Ventures

The M-PESA money-transfer service, operated by Safaricom, Kenya’s largest mobile operator, is used by 9.5 million people, or 23 percent of the population, and transfers the equivalent of 11 percent of Kenya’s GDP each year.

See presentation for a description of how it works.

The basic idea of M-PESA is that the 100,000 small retailers in Kenya who already sell mobile-phone airtime, in the form of scratch cards, can also register to be mobile-money agents, taking in and paying out cash. More than 17,600 retailers have signed up as M-PESA agents—far outnumbering Kenya’s 840 bank branches. When a customer is registered with the system, paying in cash involves exchanging physical money for the virtual sort, called “e-float”, which is credited to his mobile-money account. E-float can then be transferred to other users by mobile phone, and exchanged for cash by the recipient, who visits another agent.

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