Will There be Another M-PESA? The Future for M-Banking and Payments in Emerging Markets

Monday, 13 June 2011 10:24

What were the critical success factors behind the M-PESA phenomenon, and why have they been so hard to replicate?

One of the first, and certainly the most successful, implementations of mobile money in emerging economies was M-PESA in Kenya. What started off as a pilot in April 2007 has to date ballooned into a system that is used by some 14,008,319 customers with a total of 27,988 agents, with mobile wallets being used by the majority of those customers as their current account into which salaries are disbursed and from which they pay bills and buy goods.

The success of the system has led to the realisation that collectively the so called ‘unbanked’ or bottom of the pyramid wealth is somewhat larger than previously realised.  Banks and other financial institutions have now realised this, and are also putting systems in place to try and attract these customers through their doors, whether they be actual doors to the banks, or using sub-agencies which offer similar facilities to those offered by mobile money agents.


This report explores the reasons for M-PESA’s success, the way in which the functionality has grown, in a demand-led manner, and discusses whether we will see another mobile money phenomenon in emerging markets.There is no shortage of mobile money implementation in most other developing countries in the world right now. To date we have seen other success stories, but none to rival the success of M-PESA.

Published June 2011
ISBN 978-1-907720-24-6
50 pages
For full contents in PDF format, click here
For the FREE Executive Summary, click here

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Glossary/key terms used in this report
Executive summary
The significance of Visa’s acquisition of Fundamo and Monetise

1.    Introduction
No easy solutions
The smartphone question
M-PESA is not a totally Kenyan phenomenon

2.    Background
How M-PESA works
Front-end simplicity, back-end complexity
Transaction charges
Technical issues
User interfaces
The roll-out of M-PESA beyond Kenya
Egypt and South Africa

3.    The lessons from M-PESA
Demand-driven expansion
The lessons for developed markets
African banking market development
Agency banking
The unbanked sector
Mobile money is lucrative, but there are no quick wins
Managing the agent network
Cash movements
Key success factors
Product simplicity
Interoperability issues
Bank-led vs MNO-led models

4.    Will we see another M-PESA?
Transaction volume is critical
Why M-PESA was so successful in Kenya
Size of domestic remittances market
MNO dominance
Marketing expertise
The agent network
Cultural factors
Customer support
Regulatory support
Adding value through new features
Geography and population
A repeat of what happened in the US in the late 50s / early 60s?
Moving from cash transactions
International remittances
Getting the app to the customer
SMS and the MNOs

5.    The mobile future
The argument for mobile
The end of cards?
Closed money systems
How is PAYG Solutions planning on leveraging all of this?
Mobile’s potential to change the developing world
Message to developing markets – what can be learnt from M-PESA?

Appendix 1: Technology overview
What you need at the back end for mobile money

Appendix 2:     M-PESA and international remittances

Tables and Figures
Table 1: Comparison of mobile money transfer costs in East Africa (2009)
Figure 1: Diagram of M-PESA functionality when it was first implemented
Figure 2: Diagram of M-PESA functionality now


''A unique insight from someone who has seen, from the inside, the history of m-payments in the making. Elizabeth pinpoints the critical success factors of Kenya's M-PESA and sheds light on the back-end complexity of the system. It is a must-read for anyone interested in the evolution of mobile banking.'' Michal Kisiel, Analyst at Bankier.pl

“Drawing from direct experience of delivering and supporting M-PESA whilst at Sagentia and PAYG Solutions, this report captures the technical, security, commercial, regulatory and logistical challenges of delivering money transfer services.” Dr Stella Wooder, Former Head of Managed Services, Sagentia Ltd.

“I couldn't agree more with your assessment of M-PESA’s key success factors.” Oscar Ahere, CEO, Flexus Technologies

“A well thought-out analysis of mobile payments for the unbanked.” Gareth Pateman,Senior Development Manager for M-PESA at Vodafone


Elizabeth Galpin was a member of the original M-PESA development team, who has over 25 years’ experience in the IT industry and is the co-founder of PAYG Solutions Ltd., which uses mobile technologies combined with cloud computing in sectors including agriculture and microfinance to provide solutions for people at the bottom of the pyramid to save and earn money.

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