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Mobile Payments Go Viral: M-PESA in Kenya

Capco Institute’s Journal of Financial Transformation, No. 32, p. 169, August 2011

YES AFRICA CAN: SUCCESS STORIES FROM A DYNAMIC CONTINENT, P. Chuhan-Pole and M. Angwafo, eds., World Bank, August 2011

15 Pages Posted: 21 Apr 2010 Last revised: 20 Sep 2011

Ignacio Mas

Tufts University

Daniel Radcliffe

Bill and Melinda Gates Foundation

Date Written: March 1, 2010

Abstract

M-Pesa is a Small-Value Electronic Payment and Store of Value System that is Accessible from Ordinary Mobile Phones. It Has Seen Exceptional Growth Since its Introduction by Mobile Phone Operator Safaricom in Kenya in March 2007: It Has Already Been Adopted by 9 Million Customers (Corresponding to 40% OKenya's Adult Population) and Processes More Transactions Domestically than Western Union Does Globally. M-Pesa's Market Success Can Be Interpreted as the Interplay of Three Sets of Factors: (I) Pre-Existing Country Conditions that Made Kenya a Conducive Environment for a Successful Mobile Money Deployment; (Ii) a Clever Service Design that Facilitated Rapid Adoption and Early Capturing of Network Effects; and (Iii) a Business Execution Strategy that Helped M-Pesa Rapidly Reach a Critical Mass of Customers, Thereby Avoiding the Adverse Chicken-and-Egg (Two-Sided Market) Problems that Afflict New Payment Systems.

Keywords: mobile banking, e-payments, microfinance

Suggested Citation

Mas, Ignacio and Radcliffe, Daniel, Mobile Payments Go Viral: M-PESA in Kenya (March 1, 2010). Capco Institute’s Journal of Financial Transformation, No. 32, p. 169, August 2011; YES AFRICA CAN: SUCCESS STORIES FROM A DYNAMIC CONTINENT, P. Chuhan-Pole and M. Angwafo, eds., World Bank, August 2011. Available at SSRN: https://ssrn.com/abstract=1593388

Ignacio Mas (Contact Author)

Tufts University ( email )

Medford, MA 02155
United States

Daniel Radcliffe

Bill and Melinda Gates Foundation ( email )

P.O. Box 23350
Seattle, WA 98102
United States

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