M-Pesa: 5 Fast Facts You Need to Know


Anyone with a cell phone in Kenya or other M-pesa regions can use the service. It’s simple and accessible. The account can be set up by depositing money with an M-pesa agent, such as at this stand in Kenya. (Flickr/Andrew Currie)

M-Pesa is a mobile money transfer service that launched in Kenya in 2007. It’s operated by Vodafone for Safaricomm and Vodacomm, the largest mobile operators in Kenya and Tanzania. The service was the first to let you text money to other people, followed but not yet matched by PayPal, Google, Facebook, and soon Apple. The service has improved basic commerce and helped bring necessities like water and food to Kenya’s poorer areas, but it’s not without its issues, CBS News reported. M-Pesa is growing in popularity and status, and will be featured on 60 Minutes Sunday night.

Here’s what you need to know.

1. M-Pesa Provides Bankless Banking in Regions Where Banks Are Scarce


M-pesa provides a bankless banking service unmatched in the United States. (M-Pesa)

M-Pesa provides “bankless banking” in regions where banks are scarce. Before M-Pesa, cash often had to be transported by buses and thefts were frequent. Now, people just give cash to M-Pesa agents and they can then spend their virtual currency almost anywhere, CBS News reported. Cab drivers, shop owners, neighbors, and friends — anyone with a cell phone — can accept M-Pesa currency. Safaricom adds a small service fee to each transaction and brings in about a quarter of a billion dollars every year from Kenya. And once someone pays you with M-Pesa money, you can add it to your digital balance and use it in the future, whenever you want.

2. The Service Has Helped Poorer Regions Gain Access to Clean Water and Other Necessities


Anyone with a cell phone can use M-pesa. (Flickr/Stefan Magdalinski)

The service has come in very handy in poorer regions of Kenya. Clean water wells can be accessed via a pump that accepts M-Pesa transactions, CBS News reported. And solar panels that help families get rid of kerosene lamps that emit toxic fumes can be bought with M-Pesa funds. It’s even opened the doors for people to buy bitcoins easily, as explained in this Reddit thread. M-pesa is currently available in Kenya, Tanzania, Afghanistan, South Africa, India and Eastern Europe.

3. It Has Been Described As More Convenient And a Better Alternative to Similar Services in the U.S.

M-Pesa does not exist in the United States and similar services like PayPal, Google, and Facebook payments fall short, The Atlantic reported. With M-Pesa, you can split a bill with your friends, you can borrow money — you can use it for almost anything because it’s accepted by anyone. The same simply isn’t true of similar mobile payments in the U.S. PayPal, for example, lets you send money to friends. But most restaurants won’t let you pay a bill with your PayPal account.

The system is very easy to use, as explained here. The account is linked to your cell phone number. You can access the account on your phone at any time using a four-digit PIN. If you enter the wrong PIN more than three times, you’ll have to visit an agent with your phone and ID to unlock the account. To send money, just click “send money,” enter the recipient’s phone number, the amount, and your PIN. When money is sent to you, you’ll get a text letting you know. If you want to withdraw money or deposit money, you have to visit an M-pesa agent, who are everywhere in the regions where M-pesa works.

4. M-Pesa Is Not Without Its Problems


Some people try to take advantage of the M-pesa system. (Flickr/Rosenfeld Media)

Like almost any technical system, M-Pesa isn’t without its issues. On one Reddit thread, a poster explains that you are limited to a maximum $700 transfer a day and a $1,400 balance. (This hasn’t been confirmed, however.) In the same thread, a Redditor explained that one big downside is that whenever the server is under maintenance, the entire ecosystem freezes.

The service has also been the target of fraud. Kenyan police are being investigated for potential M-pesa fraud, such as accepting bribes via M-pesa, Daily Nation reported. Because U.S. banking laws are so much stricter than those in Kenya, the service isn’t expected to be available in the United States anytime in the near future.

5. The Mobile Payment System Is Now Part of the Culture

The mobile payment system is now a part of the culture of the region. You can see it through texts, like this one where a woman on Twitter asks for prayers for her boyfriend so he can send her M-pesa texts:

M-pesa is also used now for fundraising and helping families in need, similar to how Gofundme and similar sites are used:

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