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Mpesa, big in Africa, bigger in Europe?

Imagine that one day people from your country’s rural areas start paying with their mobiles. Would it be strange? Definitely. That would mean they are more advanced in mobile payments adoption than the majority of people living in cities (who still prefer to use plastic).

Such scenario might imply two things: a) you are dreaming, b) M-pesa has entered your country.

In Kenya, where the majority of people live in rural areas, 2/3 of country’s population (17 mln) uses their phones to pay for goods or transfer money. This is because M-pesa – the leading mobile payments service on the  market  - is designed to thrive in the hardest conditions (in which banks would never survive).

For the first time in Europe, the service was recently introduced in Romania. Vodafone, the M-pesa owner, is evaluating other countries “with a similar financial infrastructure“ in the region and may enter some other Central and Eastern European markets.

What countries are next on the Vodafone list? Below I gathered five points describing conditions that need to be fulfilled for the M-pesa success (if your country qualifies, expect for M-pesa):

  1. The key element is the underbanked rate - the higher the better. This is why after robust success in Kenya, the service arrived in countries like Tanzania (only 17% of population has bank accounts), India (35%), and most recently in Romania (45%). Underbanked don’t use bank services because, for instance, they don’t trust banks, they work in shadow economy, their income is too small to cover banking fees or they just don’t want to deal with all the paper work. In Western Europe there are approx. 93 million underbanked consumers, according to MasterCard, so the potential to grow is huge (note that M-pesa operates only in a given country’s currency so it is limited to its borders).
  2. Second condition - high mobile penetration. By saying this I don’t mean smartphone penetration, I mean any-mobile-phone-penetration. The strength of m-Pesa solution lies in its simplicity. Kenyans do not need a smartphone with a screen resolution of 720x1366 or speech recognition option in order to easily transfer m-money. They only need a cell phone (even very old model of Nokia 3310 will do) and a SIM card issued by Safaricom (Vodafone’s MNO in Kenya). You do not have to download any payment application – the system is based on USSD codes so It works on every single mobile phone capable of sending SMS.
  3. Large remote areas. The main M-pesa value is that it allows to send money easily over long distances. This is why such service is a necessity for people leaving in remote areas where the only method of sending money would be a local bus. M-pesa is without comparison safer and faster. People who work far away from home use it to send money to their families, to pay for services such as taxi (no need for a terminal – taxi driver receives money on his phone) or to pay bills.
  4. M-pesa would be useless if users weren’t able to easily withdraw and deposit cash. Therefore, other crucial elements for success are nationwide agent outlets which replace ATMs and cash deposit machines. More than 4 000 agents operate in Kenya – you will find them mostly at roadside shops and sometimes even as remote dealers with their CPU connected to a battery.
  5. The last point I would like to add is the lack of competitive solutions. I am not saying it’s a must have, it’s just that in other African countries, where the M-pesa wasn’t first on the market and it competes with other m-payment solutions, it did not repeat its Kenya success, for e.g. in India it is used “only” by 1 mln people.


In CEE Vodafone operates in Hungary, Albania, the Czech Republic and also has alliances with operators in some other countries. As for similar financial infrastructure - it can mostly be found in former Soviet Union countries. Maybe villages in one of those countries will soon become the cradle of m-payments.

In my next piece. I will analyze what banking solutions are more suitable for urbanized western countries. See you!


About me:

Tomasz Krajewski, Head of mCommerce at eLeader. Works on project where his goal is to transform mobile banking into the first choice app.



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