Can the M-pesa model work in ‘developed’ economies?

Written by on June 26, 2015 in BillingViews, Opinion with 0 Comments

man texting, reading news on smart phone, ignoring offered money, cash backNew research from Juniper Research proves what we all know – that money transfer services are growing strongly in many parts of Africa and elsewhere. The icon of mobile money services, Safaricom and its M-pesa service, recorded mobile money revenues of $330 million in the last financial year. Meanwhile, MTN Uganda and Vodacom are generating more than 10 percent of their revenues from mobile money.

The research predicts that these services will be supporting $4 billion in transfers a year by 2018.

All is not plain sailing, though, with some service providers attracting criticism of poor targeting and inappropriate messaging, causing a lack of repeat business. Some customers are being forced back to using bank governed systems that have high cash out rates. Safaricom has been forced to shut down some agents in Uganda.

Even so, the success of these services is not in doubt. They have transformed the lives of many, many people.

The real question about these consumer to consumer services is whether, and to what extent, they can be transferred to other, more widely banked markets. Clearly, similar services will succeed in other emerging markets, but would an M-pesa like service work in the US, for example?

On the face of it, probably not. But then that ‘conclusion’ takes in a segment that comprises people with decent incomes, bank accounts, credit cards and mortgages. That said, students, as a segment, tend not to have the ‘luxury’ of mortgages and complicated financial lives. Would they transfer money to friends or family? Would it be useful when they are splitting the bill in a restaurant? Or paying for a drink at a crowded bar?

Probably the answer is that in some niche instances such a service might work if it was made ‘cool,’ but there are other solutions. And some are supported by banks.

The world, though, is going (in many cases has gone) mobile. Invoicing, payroll, paying bills is all moving to platforms which can be managed by mobile. So, whether this continual shift will open the door to these services is certainly worth a thought.

Even with Apple Pay, Google Pay, Samsung Pay and all the others, it just may be that a simple mobile money service could take off. If not, we will continue to watch the developments in Africa and elsewhere – with interest. Who knows, with the increasingly tense battle between the device and operating system giants, there could be an opportunity for operators to slide to the plate with a simple, secure solution.


Over the weekend, the impetus to pay bills via mobile phones got stronger. Now, with services such as SimbaPay, people in the UK can pay bills for their relatives in Kenya. This service is especially targeted at time sensitive bills such as hospitals but now bill payment services includes a range of services such as utilities and telecoms. This proves, if proof were needed, that a simple person-to-person service can evolve and that success breeds innovation. Who knows where the M-pesa and other, connected, services will end.

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .


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