How the M-pesa system works

M-pesa M-pesa these are the words that dazzles everywhere throughout
the Kenyan landscape thus echoing its success as a mobile banking that rose
from a mere prototype application to the world biggest mobile money
transfer. M-pesa was first launched in Kenya by Safaricom in 2007
undergoing extensive development by companies such as IBM Sagentia.
After its launch and success in Kenya M-pesa rapidly expanded in other
African countries such as Tanzania, South Africa and outside the continent
.Before I dig deep into how the system works and the invaluable services it
offers to the common mwananchi let first begin my understanding what is
mobile banking. Mobile banking is a system that allows customer of a
financial institution to conduct a number of financial transaction through a
mobile phone.
To begin with the M-pesa mobile money transfer is a network that has
senders and recipients i.e. users, agents and technical team that network
from behind the scene. First you have to register to join M-pesa at any Mpesa agent for free. This is quite an easy task as M-pesa has an army of
agents dotted all over the country numbering about 80000. Once registration
is done the M-pesa system sends you an update menu on your phone thus
giving you the green light. The second phase is you can now load money into
your newly created M-pesa account by handing over cash to the M-pesa
agent and he/she loads it to your phone. Third phase you can send money by
using your phones menu to send money to a recipient phone number. To
achieve this transaction Safaricom uses a commodity known as a e-float
measured in the same units as money. You can also pay bills using the Mpesa phone menu. The M-pesa money transfer does not pay interest on
deposits like a traditional bank but rather accepts deposit and withdrawal
only. Safaricom charges no depositing funds but a sliding tariff is levied on
withdrawals.
Safaricom uses the SMS technology and an interface to facilitate the
transaction of M-pesa services. Since M-pesa uses SMS technology it is
dependent on cell towers for distribution of data, Safaricom utilizes its vast
network of towers in the country to facilitate transaction and ensure M-pesa
runs effectively and becomes a success story
In conclusion as the wise men say innovation is not the results of chance, its
the results of action and action is not a thing to wait for. Its a thing to do.
The situation in Africa necessitated the need for mobile money transfer thus

M-pesa was conceived which has forever changed the lives of many people
and put Kenya as the top contender for mobile banking industry.

REFERENCES
1. http://en.wikipedia.org/wiki/M-Pesa
2. "CCK releases 2nd quarter ICT sector statistics for 2011/2012". Communications Commission of
Kenya. 17 Apr 2012.

3. "Sagentia"
4.
Mas and Morawczynski (2009): Designing Mobile Money Services: Lessons fr
om MPESA, Innovations,

5. Bachelor, S. (2012), changing the Financial Landscape of Africa: An Unusual Story of Evidenceinformed Innovation, Intentional Policy Influence and Private Sector Engagement. IDS Bulletin, 43: 8490.
doi: 10.1111/j.1759-5436.2012.00367.x