{"id":139,"date":"2013-11-30T12:40:02","date_gmt":"2013-11-30T04:40:02","guid":{"rendered":"http:\/\/www.www.innovationiseverywhere.com\/?p=139"},"modified":"2013-11-30T12:40:02","modified_gmt":"2013-11-30T04:40:02","slug":"mpesa-done-right-headed","status":"publish","type":"post","link":"https:\/\/innovationiseverywhere.com\/fr\/mpesa-done-right-headed\/","title":{"rendered":"What MPesa has done right and where it is headed"},"content":{"rendered":"<p>During\u00a0<a href=\"http:\/\/www.afrikoin.org\/\" target=\"_blank\" rel=\"noopener\">Afrikoin<\/a>, the\u00a0<strong>first mobile money and digital currency conference held in Nairobi<\/strong>, I met with\u00a0<a href=\"ke.linkedin.com\/pub\/brian-muthiora\/45\/32a\/949\" target=\"_blank\" rel=\"noopener\">Brian Muthiora<\/a>. Brian joined the local branch of\u00a0<strong>GSMA<\/strong>, the global association for mobile operators, after 5 years at\u00a0<strong>Safaricom<\/strong>\u00a0handling the regulation issues for MPesa, the mobile money system designed by the Kenyan telco. Over an hour, I had the chance to hear about the story<strong>\u00a0of MPesa told by an insider<\/strong>.<\/p>\n<div id=\"attachment_244\" style=\"width: 660px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/MPesa-infographic-users-mobile-money-afrikoin-history-of-m-pesa-mpesa-martin-pasquier-bitcoins-3.jpg\" target=\"_blank\" rel=\"noopener\"><img fetchpriority=\"high\" fetchpriority=\"high\" decoding=\"async\" aria-describedby=\"caption-attachment-244\" class=\"size-full wp-image-244\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/MPesa-infographic-users-mobile-money-afrikoin-history-of-m-pesa-mpesa-martin-pasquier-bitcoins-3.jpg\" alt=\"Martin pasquier innovation is everywhere nairobi kenya MPesa infographic users mobile money afrikoin history of m pesa mpesa bitcoins\" width=\"650\" height=\"828\" \/><\/a><p id=\"caption-attachment-244\" class=\"wp-caption-text\">Yes, that&rsquo;s \u20ac12 billion in 5 years<\/p><\/div>\n<p>MPesa remains slightly\u00a0<strong>mysterious<\/strong>. It&rsquo;s undoubtedly a hit in the mobile money business, with\u00a0<strong>\u20ac12bn exchanged over the last 5 years<\/strong>, but yet it has not left<strong>\u00a0Kenya<\/strong>. Even nearby Tanzania, which shares some of Kenya&rsquo;s ethnicities, cultural practices and economy, doesn&rsquo;t use MPesa. The research for MPesa&rsquo;s success is still ongoing, but\u00a0the following points could help shed some light.<\/p>\n<ul>\n<li>MPesa was designed and rolled out by Safaricom, the\u00a0<strong>dominant telecom operator in Kenya with almost\u00a0<a href=\"http:\/\/www.businessdailyafrica.com\/Corporate-News\/Safaricom-tightens-its-grip-on-mobile-telephony-market\/-\/539550\/1933000\/-\/7il8gi\/-\/index.html\" target=\"_blank\" rel=\"noopener\">80% market share<\/a>.<\/strong>\u00a0Any innovation from such a giant in the industry can be easily promoted to a huge user base. However, as\u00a0<a href=\"https:\/\/twitter.com\/Mbwana\" target=\"_blank\" rel=\"noopener\">Mbwana Alliy<\/a>\u00a0from the Savannah Fund and Brian from GSMA are quick to note, other countries with dominant operators have attempted similar technologies but have not done nearly as well, so this can&rsquo;t stand as the main factor behind MPesa&rsquo;s success.<\/li>\n<\/ul>\n<ul>\n<li>Safaricom proved to be a\u00a0<strong>clever product designer<\/strong>, especially in the\u00a0<strong>user experience<\/strong>\u00a0field. In the early days, MPesa was thought of as a way for <strong>groups\u00a0<\/strong><strong>of women<\/strong>\u00a0(known as\u00a0<a href=\"en.wikipedia.org\/wiki\/Chama_(investment)\" target=\"_blank\" rel=\"noopener\">chama<\/a>) to pay for their\u00a0<strong>laundry<\/strong>\u00a0service on a monthly basis. The\u00a0<strong>women in each test group began to use the service to send and receive money between each other<\/strong>. As a telecom operator making money on each transaction, it was obvious than making MPesa a mobile money service was more profitable than a monthly laundry payment service.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<div id=\"attachment_245\" style=\"width: 440px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/Mpesa-interface-how-to-6-steps-kenya-afrikoin-martin-pasquier-emerging-markets-innovation-world-tour-3.jpg\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" aria-describedby=\"caption-attachment-245\" class=\"size-full wp-image-245\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/Mpesa-interface-how-to-6-steps-kenya-afrikoin-martin-pasquier-emerging-markets-innovation-world-tour-3.jpg\" alt=\"Martin pasquier innovation is everywhere nairobi kenya Mpesa interface how to 6 steps kenya afrikoin emerging markets innovation world tour\" width=\"430\" height=\"395\" \/><\/a><p id=\"caption-attachment-245\" class=\"wp-caption-text\">Low-tech UX for the win!<\/p><\/div>\n<ul>\n<li>The <strong>training\u00a0<\/strong><strong>Safaricom gave its\u00a0teams<\/strong>\u00a0to operate this new service also proved critical. Instead of using uninformed and dispassionate sales teams to promote MPesa,\u00a0<strong>a separate branch<\/strong>\u00a0was set up to build, sell and operate MPesa within Safaricom. Silo work is not popular in the digital age, but for once, it proved useful as the technical experts were able to sell the product more effectively.<\/li>\n<\/ul>\n<ul>\n<li>Safaricom then had to create\u00a0<strong>a network of agents.<\/strong>\u00a0Before MPesa, it was already possible to buy and sell\u00a0<strong>airtime<\/strong>\u00a0as a virtual currency. Agents were buying wholesale airtime and they made comfortable margins with little interaction with end users. MPesa would not be a good deal for them: too many contact points with customers and less value on each of these transactions. So\u00a0<strong>Safaricom turned to the kiosks<\/strong>, which are\u00a0<strong>small convenience shops<\/strong>\u00a0selling cigarettes, fruits and basic products across Kenya. These agents were offered an\u00a0<strong>additional source of revenue<\/strong>\u00a0(taking a cut on each transaction) and an\u00a0<strong>IT system to administer<\/strong>\u00a0the mobile money, without which the reliability of each agent would not have been so solid.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<div id=\"attachment_243\" style=\"width: 810px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/Mpesa-agent-shack-kenya-afrikoin-mobile-money-martin-pasquier-emerging-markets-innovation-3.jpg\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" aria-describedby=\"caption-attachment-243\" class=\"size-full wp-image-243\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/Mpesa-agent-shack-kenya-afrikoin-mobile-money-martin-pasquier-emerging-markets-innovation-3.jpg\" alt=\"Martin pasquier innovation is everywhere nairobi kenya Mpesa agent shack kenya afrikoin mobile money emerging markets innovation\" width=\"800\" height=\"533\" \/><\/a><p id=\"caption-attachment-243\" class=\"wp-caption-text\">More friendly than your typical banker<\/p><\/div>\n<ul>\n<li>The\u00a0<strong>marketing<\/strong>\u00a0of the solution also proved clever, centred on one promise:\u00a0<em><strong>\u00ab\u00a0Send money home\u00a0\u00bb<\/strong><\/em>. Brian remembers the first time he used MPesa:\u00a0<i>\u00ab\u00a0<\/i><i>My mom told me she had a fundraising for our church back in the countryside, so she expected me to take some time during my day at the office to do the transaction, but I could now do it with a simple message, without leaving my office\u00a0\u00bb<\/i>. If Safaricom thought the main use would be urban workers sending money back home to their families, they quickly saw a boom in\u00a0<strong>inter-rural transactions.<\/strong>\u00a0The typical property in rural Kenya consists of a small shack and a big chunk of land on which to grow vegetables, fruits and a few animals. Daily transactions of these goods between neighbours\u00a0was drastically improved with\u00a0MPesa.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Initially, what was a\u00a0<strong>P2P service<\/strong>\u00a0for families and neighbors (with features such as sending money, receiving money or buying airtime), turned into a\u00a0<strong>payment service<\/strong>\u00a0with features to pay bills and buy goods. The government vision for the next few years is to have all transactions done electronically, including the tax\/bills\/fines\/benefits between the administration and the citizens. MPesa may not be the ideal candidate: it&rsquo;s perceived primarily as a payment option for daily transactions rather than larger, more significant ones. Also, as most taxpayers have a bank account, transfers and credit\/debit card payment is on the rise too.<\/p>\n<p>&nbsp;<\/p>\n<div id=\"attachment_242\" style=\"width: 410px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/mpesa-africa-mobile-money-afrikoin-martin-pasquier-journalist-innovation-emerging-markets-3.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-242\" class=\"size-full wp-image-242\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/05\/mpesa-africa-mobile-money-afrikoin-martin-pasquier-journalist-innovation-emerging-markets-3.jpg\" alt=\"Martin pasquier innovation is everywhere nairobi kenya mpesa africa mobile money afrikoin journalist innovation emerging markets\" width=\"400\" height=\"299\" \/><\/a><p id=\"caption-attachment-242\" class=\"wp-caption-text\">Well, at least in Kenya<\/p><\/div>\n<p>The<strong>\u00a0future of mobile money with MPesa is all but certain<\/strong>. Afrikoin panelists all wanted their share of the cake, from credit cards (VISA) to\u00a0<a href=\"http:\/\/martinpasquier.com\/2013\/11\/21\/how-technology-and-bitcoins-can-disrupt-the-remittance-market-discussion-with-african-startups-at-afrikoin\/\" target=\"_blank\" rel=\"noopener\">Bitcoins<\/a>\u00a0(BitPesa or Kipochi)\u00a0and to the aggregators of payment systems.<\/p>\n<p>One thing is for sure; mobile money will continue to innovate in\u00a0<strong>Kenya<\/strong>, now that the competition between banks and telcos (and, to a lesser extent, startups) is set. It&rsquo;s harder to see how European and American markets can follow suit, especially with a banking industry holding much vested interest and little competition to the significant players like Paypal and other payment services.<\/p>\n<p>Note: If you&rsquo;re interested in MPesa, you should also read\u00a0<strong><a href=\"http:\/\/www.money-realquick.com\/\" target=\"_blank\" rel=\"noopener\">Money, Real Quick<\/a>\u00a0<\/strong>by\u00a0Tonny K. Omwansa.<\/p>\n<p>Martin Pasquier<\/p>\n","protected":false},"excerpt":{"rendered":"<p>During\u00a0Afrikoin, the\u00a0first mobile money and digital currency conference held in Nairobi, I met with\u00a0Brian Muthiora. Brian joined the local branch of\u00a0GSMA, the global association for mobile operators, after 5 years at\u00a0Safaricom\u00a0handling the regulation issues for MPesa, the mobile money system designed by the Kenyan telco. Over an hour, I had the chance to hear about [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":1548,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[75,47,49,51],"tags":[69,111,78,84,112,96,113],"class_list":["post-139","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporates","category-countries","category-innovators-category","category-markets-category","tag-africa","tag-east-africa","tag-kenya","tag-mobile-money","tag-mobile-payments","tag-mpesa","tag-telecom"],"_links":{"self":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts\/139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/comments?post=139"}],"version-history":[{"count":0,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts\/139\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/media?parent=139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/categories?post=139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/tags?post=139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}