The Why’s of Mobile Money

So The question was asked of me today :’Why is Mobile Money useful  and why do we need it ? ’

I choose to look at it from a wider economic perspective ….


To Answer this question , let me point out this small piece of statistic …‘Within 2 ½ years of launching m-Pesa, the income levels of Kenyan households using that mobile money service had risen by 5-30%.’….The Economist (

(I have many question on the factors here but that’s another discussion for another  day)

Secondly ….

A global study conducted for Visa by Moody’s Analytics found that the growth in the use of electronic payment products added $983 billion to the Gross Domestic Product (GDP) of 56 countries examined between 2008 and 2012.

The five years, the study found that GDP in those countries grew by an average of 1.8 percentage points.


The lesson … here is increased uptake of mobile money and even increased mobile phone penetration increases=Upward increased on GDP


Lower cost of Money transfer leads to lower prices

Prior to the introduction of M-Pesa, In Kenya cost of sending US$100 through formal channels


  • US$12 (MoneyGram)
  • US$20 (bank wire transfer)


  • US$2.50 -MPesa (Safaricom, 2008)


Increased Competition

M-Pesa has also induced its competitors and other financial firms to improve their products and services. In some cases, firms have partnered with M-Pesa to offer an integrated service.

For example:

  1. Western Union recently partnered with M-Pesa to offer international money transfers in which migrants in the diaspora can now send remittances to their friends and family via M-Pesa with Western Union serving as an intermediary.
  2. Pesa-Point, an independent network of ATMs, allows M-Pesa users to withdraw cash using its large network of ATMs.


Increased Saving for the unbanked

Qualitative evidence from Morawczynski and Pickens (2009) suggests that M-pesa is used as a saving instrument. (This notion is supported by the 2009 round of the Finaccess survey in which over 25% of individuals report using M-Pesa as a saving device.)



Information Sources