Launched in 2007 in Uganda by Vodafone for Safaricom and Vodacom, M-Pesa is a mobile phone-based money transfer service. The service continues to expand to various other countries, such as Mozambique, Lesotho and Egypt in 2013. It also expanded to Eastern Europe (Romania) in 2014.
Although it is now the most successful mobile-phone based financial service in the developing world, it failed to take off in South Africa. This may mainly be due to the fact that according to Google Analytics, 70% of South Africans are “banked”, meaning that they have at least one bank account with an established financial institution which have their own banking products which directly compete with the offerings of M-Pesa.
Elsewhere on the African continent, as mobile phone penetration continues to expand rapidly, more consumers are taking advantage of this branch-less banking service.
The word “M-Pesa” is derived from the Swahili word for money, “pesa” and “M” is for mobile.
How it works:
The service allows users to deposit, withdraw, transfer money and pay for goods and services easily with a mobile device. The benefit of this service is that it cuts out the costs associated with the mainstream banking system. There are no branches and no consultants to deal with.
As a user, you are able to deposit money into an account stored on your cell phone.
Users can send balances using PIN-secured SMS texts to other users to redeem deposits for regular money.
Users are charged a small fee for sending and withdrawing money using the service. The transaction charges depend on the amount of money that is being transferred.
What can you do with M-Pesa?
- Deposit and withdraw money
- Transfer money to other users and non-users
- Pay bills
- Purchase airtime
- Transfer money between the service and a bank account
To find out more about M-Pesa services, visit the Vodacom website.