|Millions of mobile subscribers without bank accounts can now make simple financial transactions from their phones.|
This follows Tuesday’s launch of M-Pesa, a low-cost money transfer system from Safaricom.
The revolutionary service promises to turn your mobile phone into a bank account, cash machine, debit card and money transfer vehicle.
In time, they will also be able to borrow money, pay for shopping or other bills, and even have their salaries paid to their phones.
"With its ability to store money as e-cash, this service will benefit more than 80 per cent of the Kenyan population who do not have bank accounts," says Mr Michael Joseph, Safaricom’s chief executive.
As exclusively reported in FS last October, M-Pesa is expected to shake up the microfinance banking landscape in Kenya and across the developing world. This is because of its potential as a general-purpose cash-replacement service.
"Digital money in action"
|Users can send amounts of between Sh100 and Sh35,000 to any phone at a cost of between Sh55 and Sh175. M-Pesa accounts can only hold a maximum of Sh50,000. Subscribers will have no contact with the banks involved and the banks will not even have subscriber details. The accounts will only attract transaction charges.|
"M-Pesa is a valuable case study of digital money in action," says Mr Paul Makin of Consult Hyperion, the British IT consultancy that worked on the product for Vodafone Plc.
"It involves replacing cash with electronic money, it is for the mass market, it radically reduces transaction costs (for the least well off), provides new functionality and, most of all, it provides an infrastructure that delivers capability and efficiency to the microfinance world."