Expanding Customers' Financial Options Through Mobile Payment Systems: The Case of Kenya

This paper examines the success of M-PESA in Kenya. It calls for the propagation of a front-end, merchant based e-payment platform that could efficiently offer a fuller range of financial products to poor households.

Mobile money is attractive to customers because it dramatically expands their financial possibilities. M-PESA in Kenya is the most successful mobile money deployment by far, but it remains to be seen whether mobile payment systems can achieve M-PESA like levels of customer adoption and usage outside Kenya. In May 2010, Equity Bank and M-PESA announced a joint venture, M-KESHO, which permits M-PESA users to move money between their M-PESA mobile wallet and an interest-bearing Equity Bank account. Account holders can also tap into loan and insurance facilities. 

M-KESHO’s initial uptake has been faster than that of M-PESA. The early success of M-KESHO suggests that savings and other financial services may be a natural next step. Its ultimate success depends on a number of unanswered questions pertaining to:

• Customer convenience;
• Marketing;
• Credit scoring;
• Down-market penetration.