Bridges to Cash: The Retail End of M-PESA

Abstract

M-PESA is a remarkably successful mobile payments system launched in Kenya three years ago. Users are able to send money to each other conveniently from their M-PESA using only their mobile phones. A key to the success of M-PESA is the availability of an extensive network of retail shops that accept M-PESA deposits and withdrawals, i.e. they stand ready to exchange cash and electronic value. It is the stores that provide liquidity to the system, and they are paid a commission by M-PESA for this service. Behind the store is a network of intermediaries that arrange the logistics around cash management. In this paper we look at daily transactional data from six M-PESA stores in Western Kenya in order to better understand the liquidity management needs of these stores. We examine how liquidity needs vary by location and day of week/month, and by the level of service offered by the store.

Keywords: Mobile Money, Retail Banking, Microfinance, Electronic Payments, Kenya