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An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem

15 Pages Posted: 6 May 2011 Last revised: 4 Jun 2012

Jake Kendall

University of Washington, CSE

Phillip Machoka

United States International University (USUI) - Africa

Clara Veniard

Bill and Melinda Gates Foundation

Bill Maurer

University of California, Irvine - Department of Anthropology

Date Written: May 3, 2011

Abstract

While it has often been described as a money transfer product, when mobile money reaches scale it can also be seen as a network infrastructure and platform facilitating the exchange of cash and electronic value between various economic actors including clients, businesses, the government, and financial service providers. In the past, the emergence of other network infrastructures that provide new ways of moving people, goods, energy or information (canals, railroads, electricity, telecommunications, internet, etc.) has had transformative effects on the economy. In this paper, we document what may be the early stages of just such a transformation in the market for retail financial services in Kenya, where the M-PESA mobile money product has achieved the scale necessary to form an infrastructure backbone to the financial system.

Our investigations uncovered significant integration of mobile money into the product and services offered by financial institutions in Kenya. We find an ecosystem of firms has sprung up to facilitate the technical integration of existing financial institutions’ back end systems with the new mobile money platform. We also find a number of innovative new businesses and “pure play” startups which operate solely over the mobile money platform. That said, significant barriers remain which block the development of a more fully developed ecosystem including the high price of money transfers and the difficulty of integrating to the mobile money interfaces (especially that of M-PESA). Firms wishing to outsource their day-to-day cash transactions with clients to the mobile money system may face a new challenge, as they must find new opportunities for interactions with their clients to reinforce rapport, build trust, educate, and cross sell new products.

Keywords: Kenya, mobile money, platform, financial services, m-pesa

Suggested Citation

Kendall, Jake and Machoka, Phillip and Veniard, Clara and Maurer, Bill, An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem (May 3, 2011). UC Irvine School of Law Research Paper No. 2011-14. Available at SSRN: https://ssrn.com/abstract=1830704 or http://dx.doi.org/10.2139/ssrn.1830704

Jake Kendall (Contact Author)

University of Washington, CSE ( email )

Seattle, WA 98195
United States

Phillip Machoka

United States International University (USUI) - Africa ( email )

P. O. Box 14634
Nairobi, 00800
Kenya

Clara Veniard

Bill and Melinda Gates Foundation ( email )

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

Bill Maurer

University of California, Irvine - Department of Anthropology ( email )

Irvine, CA 92697¿5100
United States

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