Katy Gabel
18 September 2008
interview
Nairobi — Safaricom’s M-Pesa was launched in Kenya just over a year ago as a mobile money transfer service. Now the service has more than three million customers and has virtually eliminated competitors like Zain’s Sokotele money transfer service.
In September, Safaricom partnered with PesaPoint automatic teller machines (ATMs) to allow M-Pesa customers to withdraw money from 46 ATMs in the country without a bank account or credit card. Safaricom chief executive officer Michael Joseph explains M-Pesa’s success:
M-Pesa is a great service in this environment where there are so many people who don’t have bank accounts, let alone credit cards. They’ll never have a bank account. They live hand to mouth. They don’t need a bank account. Also, the banking environment and infrastructure is very poor. You can’t go traveling around the countryside and find an ATM everywhere; you can’t find a bank branch everywhere.
When we first introduced M-Pesa, it wasn’t meant to be the service that it is today. It was meant to be a micro-financing product for micro-financing companies to disperse small loans to groups of people, and they could repay the loans in turn. We saw the potential as a money transfer, so we introduced it that way.
I see it now going towards becoming a true “mobile wallet” which you could use to pay for goods and services using your mobile phone. T this is its greatest advantage: you only have to have a mobile phone. The money isn’t in your mobile phone, it’s in an account which is attached to your phone number. So if you lose your phone, you don’t lose anything. It’s not like if you lose your phone and someone can use up all your airtime. They can’t touch your money because it’s sitting in an account. Right now you can transfer money, you can pay your Safaricom bill, you can pay your electricity bill.
Essentially M-Pesa works like this. You go to an M-Pesa agent – there are 4,000 of them, and maybe there will be 10,000 by the end of this year – and you give them cash. Through a series of SMSs (short messages), that money is sent to an account attached to your phone number. If you want to send that money to somebody, you can send it through a series of SMSs. They can get the electronic money, and they can take it to an M-Pesa agent and convert it into real money. You can also draw that money yourself.
So you can put money onto your phone and you can travel safely on the bus or matatu (minibus) from here to Kisumu at no risk. When you get there, you can go to the nearest M-Pesa agent and draw the money. So it’s like a portable ATM on your phone. And it’s a very low cost transaction.
Now you have to go to an M-Pesa agent who is open when you need them, and there has to be money in the till, and so on. We’re going to launch it where you can go to an ATM, and through a series of transactions you can take the money out of the ATM. So you don’t need to have a debit card or a credit card or an ATM card.
You will soon be able to pay for your groceries when you go to a supermarket, or your fuel. I see it as a really good product for this kind of environment – a true mobile purse. I would say that just as SMS in Europe was one of the things that made mobile phones really popular,this will be the next product of the decade.
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