The Invisible Bank: How Kenya Has Beaten the World in Mobile Money

(Kenyan here) I think that the fact that Kenya did not have such a large banking industry helped M-Pesa succeed. By the time the local banks realised that it threatened to eat into their business, it had become too big and popular to beat. We had the local banking association petition the Central Bank to introduce regulations on it, the cost of compliance to which would have made it a lot more costly than it is, and subject to a lot more bureaucracy. Luckily, the proposal did not go through.

I read about halfway through this article thinking it sounds good, but they used insubstantive marketing language terms like "new innovations", "big ideas", "safely and securely", "flexible adaptable technologies", and "dreaming big but thinking locally" so many times that it gave the game away. In addition there are no down sides described, the alternatives are demonized, and there is no real technical explanation. It's indistinguishable from a full page magazine ad. It is clear is a paid placement by advocates for a concept, and not a real article from a journalist. I then glanced up to see what site is running this sort of puff article and was genuinely surprised to see National Geographic is now doing this sort of thing. I guess the journalist needs some practice so he can learn to hide his tells in future product placements.

I previously founded a credit and savings bank using mobile money in the Philippines. M-Pesa is a fantastic success in Kenya but replicating it's success in other countries has been very difficult. There are several reasons for this: 1) There were no alternatives when it was launched, eg Western Union. The best way to send money home to your family was literally to trust it to a bus driver, you can imagine how well that worked 2) The regulators were very 'soft' touch and allowed Vodaphone to launch a service which was illegal in many other countries (for money laundering reasons) 3) Vodaphone had an 80-90% market share in most segments, this prevented the 'cross-network' problem<p>I believe that until android (or other) smartphones become affordable to poor people, freeing innovation from the carriers, we won't see M-Pesa's success get replicated around the world. Then we will see rapid growth shortly after that tipping point is reached.

In Africa, many homes do not have electricity but increasingly everyone has a cell phone. Prepaid cell phone minutes have become a defacto currency in many African countries. Africans are in many ways more acclimated with using privately issued digital currencies (such as M-PESA)...

Can anyone explain how it actually works?<p>I am guessing you give vodafone 10 dollars, they give you a txt with a random code anyone with that random code and your number can request the 10 dollars to come off your account and onto theirs<p>but ...<p>What is the strength of the code ? What is the security around the transmission to your phone? It sounds bruce schneir might no like it

Does anybody have a term for the phenomenon where a technology achieves enough critical mass among early adopters for network effects to arise only to have the technology improve as it matures so the late adopters wind up leapfrogging the early adopters?<p>I see this all the time, a simple example being self check out machines. A chain in Atlanta adopted them in the late 90s (this is from memory, could be later) and they were fairly common in the city in early 2000s. They were awful/clunky to use but 5-6 years later I'm in the middle of nowhere South Carolina and find the process to be comparatively painless on an obviously newly-installed machine. Meanwhile the original technology is still installed/operational in the city.

That is a very interesting article, I love to see the innovation in these scenarios. I also kept clicking around on articles there, it seems national geographic has some very good/interesting articles. I particularly enjoyed this one involving pay as you go solar power, for lights and phones: <a href="http://newswatch.nationalgeographic.com/2012/04/17/pay-as-you-go-sunshine-how-solar-energy-and-mobile-phones-are-powering-the-developing-world/" rel="nofollow">http://newswatch.nationalgeographic.com/2012/04/17/pay-as-yo...</a>

It look like the fees can be summarized as ~2% (with a ~$1 minimum) split between sender and receiver with the full fee covered by the sender for out of system transfers. <a href="http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/Tool6.7.CaseStudy-M-PESAKenya+/$FILE/Tool+6.7.+Case+Study+-+M-PESA+Kenya+.pdf" rel="nofollow">http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/Tool6.7...</a>

I thought the Philippines had cash transfer and payment by sms since 2006 (article is 2007) my friends use this so it is not vapour.<p><a href="http://www.nytimes.com/2007/10/19/news/19iht-20oxan-PHILIPPINESMobile.7959871.html" rel="nofollow">http://www.nytimes.com/2007/10/19/news/19iht-20oxan-PHILIPPI...</a>

I'm not sure if it's exactly the same thing, but this sort of service has been available in Pakistan for a while now - <a href="http://www.youtube.com/watch?v=5kL--YSnFPo" rel="nofollow">http://www.youtube.com/watch?v=5kL--YSnFPo</a>

M-pesa is awesome, it's been intriguing to me that at Kiva we've been able to do mobile payments for microloans in Kenya long before they will be easy enough to transact in the U.S.

With this system, you're giving your location, real social graph and financial transaction data to a single company. I think I'd pass.

Was I the only one avoiding this article because they thought it's about Kanye West?<p>This trend of third world countries taking a technology and running with it doesn't surprise me one bit. It's much more difficult to disrupt an established industry with new technology than to adapt a mature technology to create new industries.

I thought I read a story recently about how the Kenyan system was being plagued by mistrust. I'll see if I can find a link.<p>Edit: can't find the story.

It's a halwa network. It moves debt. It's not at all innovative. The only reason we don't do this here is because it's illegal.

In the us you'd have to pay $30/mo for unlimited payment via mobile phones in a 2yr contact.<p>And it would only work for the first $1000, then it will cost extra per dollar.<p>And it doesn't matter it works over means already provided/charged by the telcos, they will go out of their way to make it billable.

No offense, but Bitcoin already did this.