Three Keys to M-PESA's Success: Branding, Channel Management and Pricing
This paper explores how Safaricom, the mobile operator that commercializes M-PESA, managed to create enough traction with customers and retail stores, building trust and overcoming the adverse network effects that afflict new payments systems.
M-PESA, a mobile-phone based electronic payments system, has been adopted by 8.5 million Kenyans in less than three years. User surveys indicate that it is a highly-valued service, and Safaricom continues to expand its range of applications. In the initial stages, M-PESA faced challenges such as building trust, building a network, and attracting customers and stores simultaneously. It overcame these challenges by creating:
- Awareness and building trust through branding;
- Consistent user experience while building an extensive channel of retail agents offering cash in/cash out services;
- Customer pricing and agent commission structure that focuses on key drivers of customer willingness to pay and incentive-based early adoption.
The experience of M-PESA demonstrates how powerful a payment network that offers convenience at an affordable cost can be once it achieves a critical mass.
