M-Pesa

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Advertising poster for the introduction of M-Pesa in Tanzania

M-Pesa is a system developed by the Kenyan mobile phone company Safaricom in cooperation with the communications company Vodafone and introduced in Kenya at the beginning of 2007 for the processing of basic functions of money transfer and cashless payment transactions via mobile phones without the need for a regular bank account . It enables users to deposit and withdraw cash from an electronically managed credit via dealers known as M-Pesa Agents . On this basis, direct cashless transfers of your own M-Pesa credit to other M-Pesa users and transfers of money to people without their own M-Pesa credit can be carried out through an M-Pesa agent.

Name and distribution

The name “M-Pesa” is made up of the abbreviation “M” for mobile and the Swahili word “Pesa” for cash. Since February 2008, Vodafone and the mobile phone company Roshan have been offering a comparable service in Afghanistan under the name M-Paisa . M-Pesa has also been in Tanzania since April 2008, in Fiji since 2010 , in the Democratic Republic of the Congo since 2012, in India , Mozambique , Lesotho since 2013 and under the name Vodafone Cash in Egypt , and from 2014 to 2017 in Romania and available in Albania since May 2015 . The service has been available in South Africa since 2010 but was discontinued in 2017 due to low subscriber numbers.

functionality

M-Pesa agent in Tanzania

At M-Pesa, for example, the branches of the cooperating mobile phone companies or the owners of petrol stations , supermarkets , street kiosks , internet cafes and mobile phone shops act as agents. In addition to the cashless transfer between M-Pesa agents and M-Pesa customers, as well as between various M-Pesa customers, M-Pesa customers also have the option of buying prepaid call credit known as airtime, which is done through direct transfer can act as a substitute currency to other Safaricom customers . Another widespread application not foreseen by the provider is the use of the M-Pesa credit as an electronic wallet by depositing and later withdrawing larger amounts of money for secure transfer during a trip.

M-Pesa is thus increasingly acting as an alternative to a regular bank account or credit card as well as other forms of money transfer and cashless payment transactions. Their usability is severely limited in many countries, especially in rural areas, due to the low on-site availability of bank branches and ATMs . Even for customers for whom a bank account or credit card is not available or not economical due to their low income, M-Pesa represents a replacement solution. Later expansions to include savings , time deposit and credit functions , which are known as M-Shwari since November 2012, the functionality of M-Pesa came closer to the offerings of banks.

Payment for the use of M-Pesa is made per transaction , so there are no costs for maintaining the credit. The fees in Kenya, depending on the recipient and the amount of the transaction, are up to 66 percent for a transfer to a non-registered user and between 0.16 percent and 30 percent for a transfer to a registered user. Withdrawing money from an M-Pesa agent costs between 0.47 percent and 20 percent of the amount. The transactions are processed through the transmission of SMS messages between the customers or between the customers and the agents. Technically, M-Pesa is based on supplementing the functions of the phone's SIM card with so-called SIM toolkit extensions, which are specific for M-Pesa customers and M-Pesa agents. It can therefore be used with almost any mobile phone without any further technical requirements.

distribution

After a test phase that began in October 2005 with eight agents and 500 customers who were equipped with free telephones, the system has been a regular service in Kenya since March 2007. Just one month after its introduction, 20,000 customers had registered. Around a year after it was launched, M-Pesa already had around 1.6 million users in Kenya, which at that time corresponded to around a third of all Safaricom customers and almost five percent of the Kenyan population. The number of customers continued to rise in the years that followed. In the first half-year report 2011, Safaricom stated the number of M-Pesa users at 14.9 million. This means that around 80 percent of mobile phone customers used the service. According to Anja Bengelstorf from the German Academic Exchange Service , based on data from the Kenyan Central Bank, the volume of the amounts moved via M-Pesa in 2014 was around one billion Swiss francs . The M-Pesa parent company generated a profit of around 268 million Swiss francs, which corresponds to around 27 percent of the sum moved.

In February 2008, Vodafone, together with the mobile phone company Roshan, began to introduce a comparable service in Afghanistan , which, for example, can also be used by companies to pay salaries to their employees. As part of this project, called M-Paisa , Vodafone and Roshan are also testing the use of some of the functions offered by means of speech recognition due to the low literacy rate in Afghanistan . Since the end of April 2008, Vodacom has also been offering M-Pesa in Tanzania , and since August 2010 Vodafone has been cooperating with the Nedbank banking group in South Africa . M-Pesa was subsequently introduced in other countries, for example in June 2010 with the name M-Paisa in Fiji , in November 2012 in the Democratic Republic of the Congo and in 2013 in India , Mozambique , Lesotho and under the name Vodafone Cash in Egypt .

From March 31, 2014 to December 1, 2017, M-Pesa was offered in Romania for the first time in a European country, but closed again due to financial losses. The service has been available in Albania since May 2015.

Financial inclusion and poverty reduction

M-Pesa is considered to be a prime example of how innovative financial technology can integrate people into the formal financial system, making a profit while fighting poverty. Tavneet Suri from the Massachusetts Institute of Technology and William Jack from Georgetown University have shown the positive effects of M-Pesa on poverty reduction in a series of scientific studies since 2011. In particular, her article published in Science in 2016, according to which the spread of M-Pesa lifted 194,000 households or 2% of the Kenyan population out of poverty, was very influential in the development aid community. Development institutions regularly cite this M-Pesa result as evidence when they publish about the potential of innovative financial technology for poverty reduction and development. A UN report on "Financing for Development" states that the digitization of financial services opens up new opportunities for financial inclusion in line with the 2030 Agenda for Sustainable Development and the implementation of the Social Development Goals. In Kenya, the spread of mobile money has lifted two percent of households above the poverty line.

criticism

It is criticized that Safaricom exploited its monopoly-like position to charge inflated prices from its often very poor customers. The Bill and Melinda Gates Foundation warned in 2013 that a lack of competition in mobile payment services could lead to inflated prices. As a negative example, she cited M-Pesa in Kenya, because there it costs the equivalent of 0.30 dollars to transfer an amount of 1.50 dollars. In neighboring Tanzania, where there is more competition, the same provider only charges a tenth as much for such a transfer. A study funded by the US development aid organization USAID found that poor, uneducated and often visually impaired M-Pesa's customers were the target of unfair sales practices. This included non-transparent offers for expensive ringtones subscriptions, which can be concluded with one click, but which this clientele would find very difficult to cancel without help. The authors concluded that the marginalized people in Kenya did not benefit from M-Pesa, but Safaricom did. The development economist Alan Gibson came to a similar conclusion in a study that the Financial Sector Development Trust Kenya, which was involved in the development and distribution of M-Pesa, had commissioned on the occasion of its 10th anniversary. He complained that M-Pesa did not improve corporate lending and that credit availability for the important agricultural sector had actually deteriorated, summarizing that the financial sector has benefited greatly from M-Pesa while the living conditions of the population have improved would not have improved.

Milford Bateman et al. a. In a critical review of the influential article by Suri and Jack in Science, they even come to the conclusion that the spread of M-Pesa at the expense of free cash transactions has hindered Kenya's economic development. They diagnose serious methodological shortcomings in Suri and Jack's study, which found positive effects of M-Pesa in combating poverty. As a counterpart to the start-ups of micro-companies and small trading activities by M-Pesa customers, which M-Pesa supports, the displacement of already existing micro-businesses in the region and start-ups that failed after a short time should have been taken into account. a. describe M-Pesa as an extractive business model. By pricing countless small transactions, it generates high profits, a large part of which is transferred to Safaricom shareholders abroad. This means a withdrawal of regional purchasing power, which makes it difficult for regional companies to find enough demand.

In terms of data protection, it is criticized that there is currently no data protection law in Kenya, which means that Safaricom can use and pass on sensitive data of its users quite freely. A major data scandal last occurred in May 2019, when data from 11.5 million M-Pesa users who had used the system for gambling were offered on the black market.

literature

Web links

Individual evidence

  1. ↑ Horand Knaup: Kenya experiences a cell phone economic miracle report by Spiegel Online from January 10, 2010
  2. ↑ Anna Sleegers: Green as Hope Report of the Frankfurter Rundschau of December 29, 2010
  3. ↑ Lynsey Chutel: MTN gives mobile money in South Africa on September 16, 2016 report
  4. ↑ New MPESA tariffs released , 2013-02.
  5. ↑ M-PESA statistics , 2013–11.
  6. ↑ Safaricom Limited Announces Unaudited Results for the First Half Ended 30th September 2011 ( Memento from May 26, 2012 in the Internet Archive )
  7. ↑ Anja Bengelstorff: A Global Success from Kenya ( Memento from September 7, 2015 in the Internet Archive ) Published by Credit Suisse on August 6, 2015.
  8. ↑ What is M-Pesa? In: Vodafone Group. Retrieved May 17, 2015 .
  9. ↑ http://economie.hotnews.ro/stiri-telecom-22052482-vodafone-inchide-incepand-din-1-decembrie-2017-serviciul-pesa-transfer-bani-plati-telefobul-mobil-romania-fost-prima -piata-din-europa-care-vofafone-introdus-acest-serviciu.htm
  10. ↑ Vodafone M-Pesa - mobile money service that has transformed the lives of millions of people launched in Albania. Press release. (No longer available online.) In: Vodafone Albania. May 5, 2015, archived from the original on May 18, 2015 ; accessed on May 17, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.vodafone.al
  11. ^ Bill and Melinda Gates Foundation (2013). " Fighting Poverty Profitably. Transforming the Economics of Payments to Build Sustainable, Inclusive Financial Systems "
  12. ↑ United Nations. 2018. Financing for Development: Progress and Prospects 2018 - Report of the Inter-Agency Task Force on Financing for Development . New York: United Nations.
  13. ^ Bill and Melinda Gates Foundation (2013). " Fighting Poverty Profitably. Transforming the Economics of Payments to Build Sustainable, Inclusive Financial Systems "
  14. ↑ Susan Wyche, Nightingale Simiyu, and Martha Othieno (May 2016). "Mobile Phones as Amplifiers of Social Inequality Among Rural Kenyan Woman" ACM Trans.-Comput.-Human.-Interact., Vol. 23, No. 3, Art. 14
  15. ^ Alan Gibson: Ten Years of a Market Systems Approach in the Kenyan Financial Market . FSD Kenya, August 2016.
  16. ↑ Milford Bateman, Maren Duvendack & Nicholas Loubere: "Is fin-tech the new panacea for poverty alleviation and local development? Contesting Suri and Jack's M-Pesa findings published in Science." Review of African Political Economy. June 2019. [1] or in freely accessible short form: Bateman, Duvendack, Loubere: " Another False Messiah: The Rise and Rise of Fin-tech in Africa ." Review of African Political Economy Blog.
  17. ↑ Maximilian Henning: Kenya: Data from 11.5 million customers of a provider end up on the black market. In: Netzpolitik.org. July 2, 2019, accessed on July 2, 2019 (German).