Mobile Money Usage Patterns of Kenyan Small and Medium Enterprises

19 Pages Posted: 25 Jul 2012

See all articles by Jake Kendall

Jake Kendall

University of Washington, CSE

Ben Lyon


Dylan Higgins

affiliation not provided to SSRN

Date Written: July 1, 2012


Some people expect to see small and medium enterprises (SMEs) benefit substantially from using mobile money (MM). SMEs are often seen to process large numbers of payments and can have a surprising amount of money flowing through them. At the same time, their need for payment and transactional services are not always well served by traditional banks. They do not always find it easy or cost effective to adopt a full-featured package of banking services as a larger business might. Anecdotal evidence seems to confirm that many small businesses use MM intensively in markets where it is available; however, the phenomenon is not well documented or researched. In response, in late 2011, we conducted a survey of 865 SMEs in Kenya to better understand MM adoption patterns in one of the most active markets in the world.

We find that whether Kenyan SME owners use MM to pay utility bills or salaries or suppliers, they are driving higher volumes of both MM adoption and transactions. Our data show that of the 865 SME owners who responded, 861 (99.5%) used MM in their personal or business dealings, and 67% used it for business. SMEs are intensive users compared to consumers; 80% report using MM once per week or more, whereas the average usage in Kenya is closer to twice a month. SMEs also appear to promote viral adoption along the supply chain; many say they adopted it because clients or suppliers asked them to. For these reasons SMEs should be a critical market segment for mobile network operators who seek to make MM usage pervasive across the value chain from consumers, to merchants, to suppliers.

We also found that while MM use by SMS is widespread, it is not yet deep and SMEs are not yet “closing the e-loop.” Most SMEs use MM on a one-off basis and do not actively promote MM at the point of sale. In particular, SMEs are not yet closing the e-loop by receiving large volumes of retail transactions electronically and then paying out to employees in electronic value – both retail transactions and wage payments were predominantly cash. We did find that 28% reported accepting MM retail payments, a figure we found higher than expected given the high pricing of transactions and lack of a convenient interface. Enticing SMEs and other businesses to close the loop will be a major part of the endgame for MM operators who hope to move toward a cash-light world.

Finally, our survey found several barriers that have prevented people from using MM. Specifically, respondents cited high tariffs and inadequate access to record-keeping and payment-management interfaces as main barriers to adoption. In order to make MM ubiquitous, MM providers and their partners will need to keep an eye on cost and convenience and offer value-added services beyond the transaction.

Keywords: mobile money, MSMEs, money transfer, retail payments, payments

Suggested Citation

Kendall, Jake and Lyon, Ben and Higgins, Dylan, Mobile Money Usage Patterns of Kenyan Small and Medium Enterprises (July 1, 2012). Available at SSRN: or

Jake Kendall (Contact Author)

University of Washington, CSE ( email )

Seattle, WA 98195
United States

Ben Lyon

Independent ( email )

Dylan Higgins

affiliation not provided to SSRN ( email )

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