M-Pesa and Safaricom

From the first day I arrived in Nairobi, I’ve been hearing about this nifty little service called M-Pesa that’s run by the telecom company Safaricom.

Pesa means ‘money’ in Swahili, and M stands for mobile in this case, so M-Pesa is all about mobile money. It’s a service where you can load money to an account and transfer it around using your cell phone! You can transfer money to anyone who has an M-Pesa account – friends, family, shop owners – as long as you have their number. Pretty much every shop has their M-Pesa number posted above their desk.

It’s an ingenious sort of system for a society that lives on cash. No one has a credit card here, though places that cater to foreigners generally accept credit. Debit cards are for people with enough money to have an actual bank account, and they’re generally only used to take cash out of a bank machine.

M-Pesa, on the other hand, works with people who would never think to set foot in a bank, who could never open a bank account even if they wanted to. At the same time, they don’t always want to keep everything in cash all the time. M-Pesa gives them an opportunity to deposit money and use their phone as their bank account.

Of course, the system isn’t perfect. There are accounts of people abusing the system, transferring around money sneakily and creating all kinds of fraudulent schemes, and there’s a lot of room for human error when you type in the 7-digit account number. Overall though, it’s a pretty good system. I’m not sure why North America hasn’t caught on to this whole ‘pay by cell phone’ thing yet, but I’m sure it will come…eventually.

Safaricom is also a pretty cool company. The cell phone and (amazingly cheap) phone service I’ve got are with Safaricom. For some weird reason, it costs 3 shillings per minute (just under 4 cents) to call Canada, but it costs 4 shillings per minute to call within Kenya. Also, you can sign up for all sorts of packages just by texting Safaricom. (You know those ‘text 5555’ to enter into such-and-such a contest in Canada? Think of that, but legitimate!) It’s incredibly simple, especially when you consider the immense hassle it takes to set up and manage a cell phone plan in Canada.

Overall, I think there’s a pretty good reason that Safaricom has such market dominance over here. They saw opportunity where no one else saw it, and have managed to make quite a bit of money through it too! More importantly, though, they have really managed to change the way that people in Kenya do business.