Mobile money— moving beyond payments
When I land in Nairobi or Kampala, after getting my bags, popping my sim card into my phone and sending a text to my Mom to let her know I am alive, I get a cab from the airport and ask my driver how/if they use mobile money.
In June, I took a taxi from the Nairobi airport to the Panari Hotel for Pivot East. Peter, my driver, was raving about how much he loved M-Pesa, the network of choice in Kenya. Peter lives in a slum on the outskirts of Nairobi and that morning, he didn’t have enough money to get to work. Peter sent a few messages from his beat up Nokia feature phone and instantly received a 400KES — ~$4.50 USD loan from M-Shwari to take a matatu to the lot where he picked up his car. Peter said it would be a good day for him and planned to pay back the loan at the end of the day.
M-Pesa isn’t quite a household name in the US, but after being featured on This American Life, the NY Times and other news outlets prominently, people outside of East Africa are realizing that the Kenyan mobile money network is a game changer. It was launched in 2007 after Vodacom, the parent company, received seed funding from DFID and seven years leter, M-Pesa brought in $220 million USD in revenue for Safaricom, its parents company. The vast majority, over 75%, of payments on M-Pesa are peer-to-peer (P2P) payments but successful products are being launched that are leveraging the M-Pesa network and proving mobile money can be the rails for other financial services. M-Shwari is becoming a bright example of this.
Another example of mobile money being a platform for other successful products is m-Ledger, an app recently launched with Safaricom to let business and individuals simply view and export their transactions on M-Pesa. It had 35,000 downloads in the first two weeks on the app market and all it does is let users view their account statements.
M-Pesa is not unique and other services are being launched outside of Kenya as well. In Uganda, Grameen Foundation and Plan International helped Airtel launch a product for informal savings groups to have a more secure way to store funds. Using Airtel Money, they are able to deposit and manage their savings group in the exact same way they would with cash, but with out the potential for theft. Nearly 2/3 of the Ugandan adult population participates in these informal groups making it a very attractive market for Airtel. In Uganda, MTN holds the majority of the mobile money market, but Airtel certainly hopes to capture a larger portion.
Airtel may be on to something. M-Shwari is a great example of a relatively new service built on top of m-Pesa and there’s some evidence that it is driving bottom-line growth. Safaricom recently announced their half-year results and the Revenue Per User figures for M-Pesa in H1 2015 were 10.8% higher than in the previous year and they highlighted the growth of M-Shwari as a contributor. Despite this growth, m-Shwari is still in a nascent phase. Currently, total deposits and loans comprise a mere 5% of the total transaction volume on m-Pesa, and Kenya has the lowest rate of savings in the country.
For the individual consumer, when mobile money becomes a platform, it becomes a powerful tool for financial inclusion. For the MNO or service provider, turning these networks into platforms can drive bottom-line growth and is a key to unlocking a truly massive potential market.
