M-PESA: Mobile Money for the “Unbanked” Turning Cellphones into 24-Hour Tellers in Kenya

In March 2007, Kenya's largest mobile network operator, Safaricom (part of the Vodafone Group) launched M-PESA, an innovative payment service for the unbanked."Pesa" is the Swahili word for cash; the "M" is for mobile.Within the first month Safaricom had registered over 20,000 M-PESA customers, well ahead of the targeted business plan.This rapid take-up is a clear sign that M-PESA fills a gap in the market.The product concept is very simple: an M-PESA customer can use his or her mobile phone to move money quickly, securely, and across great distances, directly to another mobile phone user.The customer does not need to have a bank account, but registers with Safaricom for an M-PESA account.Customers turn cash into e-money at Safaricom dealers, and then follow simple instructions on their phones to make payments through their M-PESA accounts; the system provides money transfers as banks do in the developed world.The account is very secure, PIN-protected, and supported with a 24/7 service provided by Safaricom and Vodafone Group.The project faced formidable financial, social, cultural, political, technological, and regulatory hurtles.A public-sector challenge grant helped subsidize the investment risk.To implement, Vodafone had to marry the incredibly divergent cultures of global telecommunications companies, banks, and microfinance institutions -and cope with their massive and often contradictory regulatory requirements.Finally, the project had to quickly train, support, and accommodate the needs of Nick Hughes and Susie Lonie M-PESA: Mobile Money for the "Unbanked" Turning Cellphones into 24-Hour Tellers in Kenya Two authors have written this case study, each taking up one part of the story.The first section is written by Nick Hughes, a Vodafone executive who started this project in 2003 and now heads a mobile payments team with the task of growing the business globally.Nick led the efforts to get Vodafone focused and supportive at the very senior levels of the company in what seemed at the outset to be a fringe project.The second section is written by Susie Lonie, an m-commerce expert who was brought into