M-Pesa turns cell phone into ATM
M-Pesa—”mobile money” in Swahili a pioneering Kenyan cell phone banking service.
Launched last year, it allows users on Kenya’s dominant Safaricom mobile phone network to establish a virtual cell phone bank account, which then can be used to instantly text money to distant family members, pay merchants or utility bills, withdraw cash at M-Pesa ATMs or shops, or just keep money someplace safer than under the mattress.
Small employers now use the pin code-protected system to pay their workers, without risking lugging bags of cash around on payday. Markets in tiny villages have seen sales jump since residents no longer need to go to town to get cash and buy goods. Already 3 million people—one in three Kenyan mobile phone users—are using the service, and more than $2.5 million has changed hands.
Kenya is not the first to try mobile banking. The Philippines, South Africa and Afghanistan all now use some form of cell phone cash transfers. The system also has drawn huge interest in the Congo, where lack of infrastructure makes transferring almost anything a challenge.
But Kenyans have been among the most enthusiastic in adopting the new technology, to the point that the country’s banks are “very scared” about losing potential depositors at the low end of the market, and money wiring companies, which charge fees much higher than those through M-Pesa, face going out of business.
Texting money still has its problems. Tough international money laundering and fraud regulations have so far kept M-Pesa from offering international money transfer services. Telephone and banking regulators are sparring over who should set the rules for mobile banking. And getting enough cash to M-Pesa agents in remote areas of the country has been a challenge.