Interesting take the mpesa back story. For those interested in the current state of the mobile money industry in Africa and other developing countries I can recommend GSMA [1].
While I think the "send money home" value proposition story in Kenya was crucial, it doesn't really explain why mobile money works (or doesn't work) as a service. This is basically all to do with massive agent networks. The business model isn't as easy to get going as people assume, and most telcos failed to pull it off. Regulation (or lack of it) was also very critical for Kenya's success.
In general mobile money is fascinating to examine though. And it's an absolute game changer in Kenya!
I think one important component to the success of M-Pesa is Safaricom's near-monopoly on the mobile telephony market. If you are not the only big player in the market it's going to be much harder to get your mobile money network running straight away because you have to think of support by other telcos and competition on pricing.
I spent some time in Kenya and M-Pesa is very practical, I used it regularly for small payments. One thing that I found a bit frustrating is the very high transaction costs - way higher than you would ever pay with regular banking. The (poor) users don't really have a choice though, so Safaricom is able to make massive profits.
Not completely similar but here in Norway we have a number of telephone companies but we still have a working mobile money solution (Vipps) since the banks actually managed to cooperate to create an (mostly) buttery smooth experience that doesn't seem to care a bit (as seen by the customer) about what phone, what plan, what provider or what bank you have.
Edit: IIRC - anyone who remembers exactly should feel free to update - it was a startup that created the first version, then I think it was bought by one of the major banks but now it seems to work completely decoupled.
While Vipps works well today, compared to MPESA it was developed when the market had already matured and you could rely on every user owning a smartphone. Telenor and DNB actually tried to release something similar to MPESA years before, but since the application had to be installed on the SIM card you had to be both a DNB and Telenor customer [1].
Vipps is not decoupled today, but has been merged with the e-identity (BankID) and e-invoicing (eFaktura) to form a monopoly behemoth owned by most banks in Norway with DNB as the largest non-majority owner.
Interesting thanks for sharing that link. Slightly unrelated but what are some potential opportunities for business in Kenya for those living abroad but want to return?
I think there are a range of software businesses that are now viable given the maturity of the mobile money systems, the penetration of smartphones and coverage of data networks. B2C is tough as purchasing power is low, but if you get to significant enough scale it works out. I'm seeing physical products do better for now in B2C, e.g there are a lot of so called pay as you go solar product players with decent investment now. I think B2B is still pretty untapped though and is personally what I'd explore more. Lots of businesses require tech solutions that solve challenges specific to a doing business context in East Africa. There are a lot of startups in Nairobi now, but quality is wildly variable. There are lots of gaps to fill!
There is quite a lively tech scene. One example of an interesting all-African startup is Africa's Talking (http://africastalking.com).
If you're looking for a problem to solve, one thing I struggled with when living there is that there is a major lack of trust between renters and landlords when it comes to housing. Some landlords are ok, but many arbitrarily withhold money from the initial deposit when renters move out and I feel like that generates quite some inefficiency in the housing market. I'm not sure what the solution would be but I know many people would benefit if there was one :)
M-Pesa is a great project. Back in 2016 my team and I tried to replicate M-Pesa in Mexico for bank the unbanked people in rural areas, financial assistance and give them a type of basic income. Only Cisco México and Susie Wee supported us, the government wasn't interested in implementing that.
Hi Juan, I was part of a team which built a mobile money (MPesa) only microfinance bank in Kenya. I now live in Mex (for family reasons). I’d love to chat to exchange experiences and what I’m working on now, which is related.
I too would like to share my experience with both of you and see if there is still an opportunity to do something along these lines. Email me at mpesa@mlke.net
Money transfer systems in developing countries are fascinating. Hawala[1] is one notable example – a remarkably fast, efficient and cost-effective system based on interpersonal relationships and trust.
The top-rated charity[1] Give Directly [2] uses M-Pesa to do unconditional cash transfers to some of the world's poorest families! Without this technology, the challenges of cash distribution would be very high.
i live in kenya and frequently use m-pesa, this service is too expensive,
a charge for both sending and receiving money just won't fly,
sadly it's backed by powers that be who constantly stiffle innovation in the payment space,
kenya is still in dark ages in fairness and plurality of payment systems.
I think, while your view point is valid, it ignores that, at the time, M-PESA was a huge leap forward. They were doing mobile money before pretty much anyone. Now, yes, Safaricom has monopolized it and is falling behind and overcharging, but that doesn't negate the initial innovation having been world-changing.
When I visited Kenya in 2012, I was fascinated to discover that this existed, and had been going strong for years already. Meanwhile in the US, money transfer seems dated by comparison. Crypto offers some hope, but the ecosystem is so fragmented and dominated by shady people.
If you look at Google search trends for the last year African countries have been the top searchers for "bitcoin". This is something people in the West usually don't understand, having a secure money that's accessible with only a phone.
While I think the "send money home" value proposition story in Kenya was crucial, it doesn't really explain why mobile money works (or doesn't work) as a service. This is basically all to do with massive agent networks. The business model isn't as easy to get going as people assume, and most telcos failed to pull it off. Regulation (or lack of it) was also very critical for Kenya's success.
In general mobile money is fascinating to examine though. And it's an absolute game changer in Kenya!
[1] https://www.gsma.com/sotir/