Despite growing agreement on the potential of technology to expand access to finance, or branchless banking, there is surprisingly little data publicly available about low-income users. This Brief draws on some of the first ethnographic research on M-PESA, one of the earliest success stories in mobile phone-based delivery of financial services. The research offers insights into how poor people use M-PESA, its impact on their lives, and some unexpected consequences.
M-PESA is a mobile phone-based service for sending and storing money offered by Safaricom, Kenya’s largest mobile service provider. Safaricom customers can register for M-PESA by visiting one of more than 10,000 merchants who act as “agents” for account opening, handling of deposits and withdrawals into the customer’s virtual “wallet,” and customer support. Customers can then use an application on their mobile phone to check their balance, send money to other people, pay bills, and purchase mobile phone airtime. Customer funds are held in a special trust account at the Commercial Bank of Africa.
Since its commercial launch in March 2007, M-PESA has achieved substantial scale along several key metrics. Nearly 7 million customers have registered with the service. An average of 150 million Ksh (US$1.96 million) is transferred through M-PESA per day, mostly in small amounts averaging just over 1,500 Ksh (US$20) per transaction. So far, the system has handled over 130 billion Ksh (US$1.7 billion).
This Brief presents 10 observations on how poor people use M-PESA and how it has impacted their lives.