March 21, 2007
Kenya sets world first with money transfers by mobile
In what is being touted as a world first, Kenya's biggest mobile operator is allowing subscribers to send cash to other phone users by SMS. The Guardian reports.
"Known as M-Pesa, or mobile money, the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector.
Apart from transferring cash - a service much in demand among urban Kenyans supporting relatives in rural areas - customers of the Safaricom network will be able to keep up to 50,000 shillings (£370) in a "virtual account" on their handsets.
Developed by Vodafone, which holds a 35% share in Safaricom,M-Pesa was formally launched in Kenya two weeks ago. More than 10,000 people have signed up for the service, with around 8m shillings transferred so far, mostly in tiny denominations.
M-Pesa's is simple. There is no need for a new handset or SIM card. To send money you hand over the cash to a registered agent - typically a retailer - who credits your virtual account.
You then send between 100 shillings (74p) and 35,000 shillings (£259) via text message to the desired recipient - even someone on a different mobile network - who cashes it at an agent by entering a secret code and showing ID.
A commission of up to 170 shillings (£1.25) is paid by the recipient but it compares favourably with fees levied by the major banks, whose services are too expensive for most of the population.
... In time, M-Pesa will allow people to borrow and repay money, and make purchases. Companies will be able to pay salaries directly into workers' phones - something that has already attracted the interest of larger employers, such as the tea companies, whose workers often have to be paid in cash as they do not have bank accounts."
Related: - Kenyans to transfer money using cell phones
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