
M-Pesa – a mobile-phone based money transfer and microfinancing service - melenaboija
https://en.wikipedia.org/wiki/M-Pesa
======
mhogomchungu
Tanzanian here.

I think calling the service "M-Pesa" is misleading since a lot of other people
are offering the same service.

Here in Tanzania,

"M-Pesa" is the name for the service offered by vodafone,a mobile
communications company.

"Tigo Pesa" is the name for the same service offered by tigo,a mobile
communication company.

"Airtel money" is the name for the same service offered by airtel,a mobile
communication company.

"EzyPesa" is the name for the same service offered by zantel,a mobile
communication company.

For the above reasons,i generally call the service offered by these companies
as "a banking service managed by mobile phone companies".

"Sim banking" is the name of the service offered by a "traditional" bank
called crdb[1] so a more generalized name that accommodates both traditional
banks and cellular network operator banks is in need.

Most traditional banks are also offering the same service.

The only thing they all have in common from the user's perspective is that the
services are offered through ussd codes[1] meaning they are not tied to mobile
phones and they work with any device that supports ussd codes.

I have an application called ussd-gui[4][3] that i use to manage by money at
vodafone "bank" using a mobile broadband modem on my linux system.

[1] [http://crdbbank.com/tz/alternative-
banking/simbanking.html](http://crdbbank.com/tz/alternative-
banking/simbanking.html)

[2]
[https://en.wikipedia.org/wiki/Unstructured_Supplementary_Ser...](https://en.wikipedia.org/wiki/Unstructured_Supplementary_Service_Data)

[3] [https://github.com/mhogomchungu/ussd-
gui/blob/master/icons/u...](https://github.com/mhogomchungu/ussd-
gui/blob/master/icons/ussd-gui.jpeg)

[4] [https://github.com/mhogomchungu/ussd-
gui](https://github.com/mhogomchungu/ussd-gui)

~~~
ganwar
So these companies act as a kind of payment bank in this capacity.

~~~
mhogomchungu
They act like traditional banks in a sense that you can have them hold your
money for you and some give out interest rates!!!.

Their biggest difference with a traditional bank is that their "bank" accounts
are tied to phone numbers.

Once they have your money,you can do money transactions more or less the same
way you do with a debit/credit card.

You can also have your "bank" accounts on these companies tied to a "bank"
account from a traditional bank and you can move your money back and forth
between them.

------
gist
M-Pesa was on 60 minutes last night:

[http://www.cbsnews.com/news/future-of-money-kenya-m-
pesa-60-...](http://www.cbsnews.com/news/future-of-money-kenya-m-
pesa-60-minutes/)

HN thread here:

[https://news.ycombinator.com/item?id=10614816](https://news.ycombinator.com/item?id=10614816)

~~~
Someone1234
Indeed. Yet another advertisement for a specific company on 60 minutes, that
show has turned into a mix of corporate PR and a government mouthpiece. What
happened to their journalistic integrity?

M-Pesa in particular in one of many competitors in Kenya. But yet they
repeated M-Pesa two or three dozen times in the report and asked people about
that specific service by name over and over.

I rarely watch 60 Minutes now. It just annoys me too much. It is like watching
CBS Evening News, just blatant propaganda and scaremongering, I miss the BBC,
and Al Jazeera (both of which are "strangely" not available in much of the US,
so we have to put up with the US version of Russia Today).

~~~
joseph
M-Pesa got there first and is by far the dominant mobile money system in
Kenya, regardless of competitors like Airtel Money. Even people who use Airtel
for their phone service will still keep a Safaricom SIM card on hand so they
can use M-Pesa.

------
achiang
A small plug for our company, Angaza Design; integration with various mobile
money providers, such as M-Pesa, Airtel, and a bunch of others is one of our
core strengths.

If you're interested in learning more about how they work, and you want to
help the one billion poorest people on the planet move off kerosene onto clean
solar, check us out -- we're hiring!

[http://www.angazadesign.com/contact-
page/#careers](http://www.angazadesign.com/contact-page/#careers)

------
kiproping
As a Kenyan I use it for many transactions, its really nice. The next frontier
though is banks adopting the M-Pesa model. Equity bank, one of the largest and
most popular bank in Kenya is issuing sim-cards (it's an MVNO) which can be
connected to it's bank accounts, as opposed to M-Pesa where a mobile service
provider(Safaricom) is holding the money. This allows more flexibility for
both the bank and the customer. The mobile money landscape is changing
rapidly.

------
saisi
A lot of debate's going round over what is M-Pesa and what it isn't. Yes,
M-Pesa is the specific variant of mobile money transfer introduced by Vodacom.
However, M-Pesa in Kenya is what pushed mobile money transfers to light in
Africa. For the longest while it wasn't just successful, but also the only
large scale deployment of such a service (At least Half of GDP flows through
the service!). Unlike other countries that had continual relaunches, rebrands,
and failures, M-Pesa just bloomed. All that led to this brand genericide where
it's much easier to talk of M-Pesa rather than account for Tigo, Airtel money,
and all other fledgling counterparts. M-Pesa is the 'kleenex' / 'xerox' of
mobile money transfers. (African Telecos are always being acquired, renamed,
or merged leading to rebooting/relaunching of their mobile money brands.
Contrastingly, Safaricom, the telecommunications company that deploys M-Pesa,
is remarkably stable and is the biggest earning corporate entity in Eastern &
Central Africa)

~~~
IkmoIkmo
> At least Half of GDP flows through the service!

Completely wrong.

~~~
saisi
I hate Hacker News for comments such as yours that do little to further the
discussion. You do little to explicate on what makes the statement wrong. It's
about constructive dialogue, not notching points. I should have been more
explicit. The total volume of transactions through M-PESA is comparable
equivalent in worth to half the GDP.

~~~
IkmoIkmo
Perhaps you should start by actually making a statement that has value and
that is supported by data and is actually true, before you put the burden on
me to do your job explaining your points, when you're the one making a wrong
statement in the first place. But I'll oblige.

First, even in your correction, you're still making a pretty useless point
that is misleading to people who don't understand the nuance of the definition
of GDP, don't have an understanding of MPESA (i.e. the target audience of your
comment), and implies mpesa is far more significant than it actually is. i.e.
it misleads, whether you like it or not. It's so misleading you probably took
it as a fact when you read it the first time, and only saw the mistake when I
told you it was wrong and you looked it up. Why not correct your statement
with a useful quantifiable answer?

So why is it a pretty useless point? Well look, if I hand $1 to my brother,
and he hands it back to me right away, and we do this 100000 trillion times on
a digital money system we designed (say, a simple database with a simple
algorithm to execute all these trillions of payments), we'd be able to say,
100% truthfully, that our silly payment system has a total volume of
transactions that far exceeds GDP, or the entire world economy in this century
so far, for that matter. It's a meaningless statistic, and it's an
apples/oranges comparison because there was 0 added value in any of the
transactions between me and my brother. GDP measures added value, mpesa
transactions measured in volume don't. Why say 'mpesa's non added value figure
is x percentage of the country's added value figure' at all?

For example, take sinopec. Chinese company with nearly $0.5 trillion in
revenues. Imagine its profit margin is say about 5%, then that means that it
has nearly 0.5 trillion in expenses, too. So this company processes about $1
trillion in value, every year. The chinese GDP is about $7 trillion. It'd be
completely to say this single company which employs 0.02% of the Chinese
population, processes money totalling about 1/7th of China's gdp, even though
it's a factually true statement that's completely meaningless, when the real
contribution to the 7 trillion Chinese gdp is actually just about 7 billion.

Either you express a statement of how much of added value is transacted on
mpesa and take that as a percentage of total added value (GDP), or you measure
the percentage of total volume that is transacted on mpesa, as a percentage of
the total volume of all payment systems in the country, without getting into
added value/gdp at all.

If you do so, you'll find mpesa is pretty small, the Kenyan central bank has
pretty decent data. For example, in August mpesa handled about 250b kes in
value, a tiny bit less than ACH, and an order of magnitude less than RTGS in
Kenya which handled about 2.8 trillion. And those are just the electronic
payment systems where mpesa looks to be less than 7%. Let's not forget the
most recent reports are that 94% of transactions in Kenya are made with cash
(which, expressed in a silly 'volume of cash transactions as a % of gdp'
metric, would constitute a figure that's likely more than a tenfold of GDP,
but again it's meaningless).

And I'm not even getting into the fact that a large portion of economic
activity in Kenya isn't part of GDP, as the grey economy often is substantial
in developing countries, or the large amount of double counting in the figure
you're referring to.

Mpesa is awesome, I'm glad it's here, it'll keep on growing and become more
important with time. But let's not sprinkle these bs apples/oranges metrics
around on HN, the economist and the like take care of that just fine on their
own. The mpesa story doesn't need this hyperbole, and its growth statistics
are impressive and promising on their own.

~~~
saisi
> if I hand $1 to my brother, and he hands it back to me right away, and we do
> this 100000 trillion times on a digital money system we designed

Incredibly facetious. Blatantly false.

~~~
IkmoIkmo
You didn't even cite the entire sentence... Feel free to elaborate as to what
is false as I don't see it, unlike your earlier statements.

And no, it's not facetious at all. It's a theoretical example of how one can
make completely honest and truthful statements, that are misleading and
insignificant, an example you can obviously agree with because it is indeed a
silly and insignificant statement, yet completely truthful that our
bookkeeping system could indeed register the change of ownership of a $1 bill
by processing trillions of money transfer orders in a given day, generating a
volume of transactions that exceeds GDP. There's nothing false about this.

The statements by you that express mpesa transaction volume as a percentage of
gdp are as meaningless without further data. And if you do add the further
data, as I have in my post (conveniently ignored by you), you'll find mpesa is
much less significant than your statement would lead people to assume. That's
why I called your statement misleading and called you out on making the
statement, despite the fact your corrected statement is 100% truthful.

I won't require you to agree with any of my points, that's up to you. But you
can hardly call me facetious when I called you out on an error in your
statement which you corrected, in my first post, and did the homework you
should've done by adding context to your empty statements, in my second post.
If anything, I'm taking this much more seriously than you, facetiousness then
is quite an ironic accusation coming from you.

------
cbr
M-Pesa is part of what lets GiveDirectly transfer money to poor Kenyans so
efficiently: [http://www.givewell.org/International/top-charities/give-
dir...](http://www.givewell.org/International/top-charities/give-directly)

------
sgt
I'm in Nairobi, Kenya right now on a business trip to Safaricom and I can tell
you that M-Pesa is huge. In fact, the application we're building has an M-Pesa
payment component which will be leveraged to pay hundreds of thousands of
smallholder farmers in M-Pesa instead of regular cash.

------
Procrastes
I just read "The Next Africa"[1] which had a good bit on M-Pesa and one of the
cool offshoots, M-Kopa[2], which is offering a pay as you go solar
lights/radio/sim card all paid for with M-Pesa. It sounds like it could be as
big of a deal as the Rural Electrification projects of the last century.

1\.
[http://us.macmillan.com/thenextafrica/jakebright](http://us.macmillan.com/thenextafrica/jakebright)
2\. [http://solar.m-kopa.com/about/company-
overview/](http://solar.m-kopa.com/about/company-overview/)

------
brunorsini
This is completely ubiquitous in Kenya. Highly recommend chatting with
friends/acquaintances from there to understand how the country really runs on
"Pesa", as they call it.

A cool Kenyan Uber driver gave me an amazing unintentional lecture on mobile
payments the other day. It's just amazing to see innovation force its way
through when the establishment sucks (ie, most Kenyans being essentially
locked out of the financial system prior to this).

~~~
okal
"Pesa" just means money in Kiswahili. No one uses the word to refer to
"M-Pesa". Maybe you caught a snatch of conversation out of context.

------
magic_man
The big takeaway is how ubiquitous mobile phones are. Everyone might not have
water or a toilet, but they will have a cell phone since a cell phone is
cheaper than anything else.

~~~
jenshoop
This is super powerful, @magic_man, in terms of orienting the field around
designing solutions that meet users where they are (vs. approaching design
from a "remediation" vantage point). I previously worked for a non-profit
working to build the financial capability of low-income youth here in America.
We discovered that 85% of youth have mobile phones, though a much smaller
percentage belong to families that are connected to the financial mainstream
(many use fringe banking services). This was a critical insight for us; it led
us to design a smartphone application that issued teens digital challenges
designed to build financial health. Platform decision-making is paramount.

------
eitland
I sometimes work with these systems. If anyone has pointers to other similar
mobile payment systems for 3rd world countries I'm interested.

Edit

There are some interesting pointers in this previous discussion:
[https://news.ycombinator.com/item?id=10453809](https://news.ycombinator.com/item?id=10453809)

~~~
SiliconTomato
I have gone through the documentation in Jamaica and the interest rates can
net a pretty penny! Interested?

~~~
eitland
No projects there ATM but still interested if you have pointers esp. to
technical information.

~~~
SiliconTomato
Do you need implementation methods for the SW? There is an app driven and the
GSM(text message) driven version.

~~~
eitland
Mostly I just want to know which systems exist and roughly how they work in
case I'll have to integrate with more of them.

------
uptown
Here's the segment from last night's '60 Minutes' show on M-Pesa:

[http://www.cbsnews.com/news/future-of-money-kenya-m-
pesa-60-...](http://www.cbsnews.com/news/future-of-money-kenya-m-
pesa-60-minutes/)

------
ChrisArchitect
the whole time I was watching the 60 minutes feature I was thinking, sure this
is great for the people but what about the cell/mobile providers behind it
all? How do they pay for their cell network access? Who is (must be) raking it
in on that front/the gateway/infrastructure to have all of this work on top
of?

~~~
okal
The financial services are offered by the telcos themselves, who run their own
infrastructure. There's no intermediary. M-Pesa by Safaricom, Airtel Money by
Airtel, and so forth.

------
bendtherules
Why is this even so popular today? Vodafone started it years ago.

~~~
jdimov10
East Africa and some parts of Asia have had mobile money solutions like this
for over a decade. They are so ubiquitous in those parts of the world that
many people don't even bother to open bank accounts any more.

The rest of the world is still working on "fintech"... They don't like to talk
or hear about M-Pesa. So each time they do, it's a bit of a shocker.

~~~
peter303
According to 60 Minutes, competing big banks have blocked m-pesa type services
in many countries.

