Mpesa isn’t digital cash like Bitcoin.
Dominic Frisby the brilliant author of such books as “Bitcoin: the Future of Money?” and “Life after the State” wrote a great piece on why we should fear a cashless future in the Guardian earlier this week. The article makes a lot of observations that I agree with, and voices a lot of sentiments that I share. There are many uses for private transactions which are perfectly legal. The war on cash and the continued efforts to shepherd people wholesale to a cashless economy are part of a wider state war on anonymity waged on several fronts (See the FBI versus Apple). The campaign to ban the EUR 500 note in particular — beloved by rappers and reportedly drug dealers — is rather misguided. Cash does indeed empower its users and enables” them to buy and sell, and store their wealth, without being dependent on anyone else”. Poor people and small businesses rely on cash transactions. Doing away with cash will likely make them poorer, and definitely opens the way for mass state surveillance.
Except he errs in referring to M-PESA as digital cash, while M-Pesa represents the very Dystopian cashless future he is afraid of.
“Which is why there will be a role to play in the future for new forms of digital cash — from Kenya’s M-PESA to bitcoin — money you can use even if you are not financially included”
M-PESA isn’t digital cash like Bitcoin. In fact M-PESA isn’t cash period. M-PESA is a mobile remittance service that is owned and operated by Safaricom, a private business with deep ties to the Kenyan state, which owned a substantial stake in the telco up until the last decade. Safaricom all at once provides telephony and banking services to the public and surveillance equipment to the state. M-PESA transactions are by no means anonymous. Users of the remittance service must comply with KYC requirements issued by the Central Bank of Kenya. All M-PESA transactions can be traced. Those withdrawing and depositing money into M-PESA are required to show state issued identification documents. And the owners of the mobile money service , Safaricom, reserve the right to kick off any user of the service at their sole discretion. The service isn’t interoperable with any other mobile money service in Kenya where several of these mobile remittance businesses exist. M-PESA is a form of financial inclusion. It isn’t “money you can use even if you are not financially included”.
While I am sure a lot of people are at a loss to picture M-PESA (especially in the West) if they have never used it before, thinking of it as a bank account where your mobile number is the bank account number might help. The bank runs a large network of banking agents, in this case M-PESA agents. These agents are vetted and picked by the bank. Transactions are wired via the bank’s GSM network. Hopefully this will make for a much more nuanced discussion of M-PESA.