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Shame on you!

There has been news in recent weeks in the press that the banks continue to wield undue influence, aimed at protecting their powers. This time the news comes from Kenya and it's all about M-PESA.  

For the uninitiated M-PESA is a micro-payments and banking system based on the mobile phone. The service is aimed at mobile users who do not have a bank account, typically because they do not have access to a bank or because they do not have sufficient income to justify a bank account. Safaricom, a mobile communications provider in Kenya, launched the M-PESA pilot in Kenya early in 2007.

Under the M-PESA scheme customers can:

  • Put money into their account by depositing cash at a local Agent,
  • Send money to other mobile phone users through SMS instruction,
  • Withdraw cash at a local Agent.

Since its launch, M-PESA has become a huge success, with reportedly more than 5,000,000 registered users and almost 5,000 registered outlets.

Now, suddenly M-PESA has become the center of a controversy initiated by the local banking industry who are urging the Kenyan Government to take action against the scheme because it a "disaster waiting to happen".

More likely it is the usual story of a consortium of big banks wielding undue influence over the powers that be, simply to protect their own markets and products. And these products are generally, inefficient, overly expensive and unsuitable for the task at hand.

For my money, M-PESA through its success has become a competitive issue and what better way for the formal banking industry to beat it than to try and kill it, by getting the government to regulate. It's easier and far cheaper doing this, than trying to compete with a truly innovative product that holds such promise for millions of folk whom banks would never dream of opening accounts for.

To the banks, all I can say is shame on you! Come out and fight fair and perhaps you and those millions of unbanked folk, who really need efficient and cheap payment services will all benefit.


Comments: (1)

John Dring
John Dring - Intel Network Services - Swindon 19 January, 2009, 09:37Be the first to give this comment the thumbs up 0 likes

It happens all the time.  Monopolies and market leaders resist change wherever that change is going to cut their margins or reduce their market share.  They may 'play the game' and participate in regulator or consumer-body led initiatives (like GSMA MMT) but really they have little vested interest in changing the status quo just to offer a better, cheaper service to the customer.
I think it takes a law or an edict from the regulators to push it through, and even then it will be challenged and delayed as long as possible - which is what is happening here.  Even the best ideas can be sunk with enough FUD.

It's just how business is I guess.

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