Despite a fair number of attempts at elaborately fleshing out Mpesa for readers, in this article I outline 5 more things left out by:
Claudia McKay & Rafe Mazer did an article for the CGAP titles “10 Myths About Mpesa: 2014 Update” – a follow up to a previous article by Claire Alexandre “10 things you thought you knew about
Mpesa”. In both of these articles, 5 crucial things were left out that you should know about!
Mpesa is used on a contractual basis from Vodafone Group.
M-pesa is not a Kenyan invention, by any stretch. M-pesa is owned by Vodafone Group, was partly funded by the UK DFID, conceptualized by Nick Hughes – an executive at Vodafone – in 2003 and finally project managed by Susan Lonie – an m-commerce expert – from pilot to commercial operation.
A confluence of factors – fashionable sustainable development, microcredit prospects in East Africa and a willing mobile network operator, Safaricom – meant that Kenya was a hotbed for testing a pilot.
M-pesa was not originally intended as a money transfer tool
Conceptually, M-pesa was devised to streamline MFI manual based operation, however. P2P money transfer turned out to be the killer app, shelving the original use cases.
Micro lending institutions are burdened by costly, inefficient and sometimes redundant manual processes – manual data entry, paper records and frequent visits for example. M-pesa pilot project partnered with Faulu Kenya (Kenyan MFI) to automate loan repayments and reconciliations via electronic money. Pilot automation worked like a charm while exceeding expectations. Ostensibly,
Faulu Kenya struggled to update its systems to match this newfangled virtual bank.
Faulu Kenya now feels it should be redressed for intellectual property theft. The matter is still in court*
M-pesa was NOT the first mobile money transfer system in the world
The first ever mobile money transfer system was Smart Money, launched in the Philippines in 2001 by Smart Communication Inc. A 7 year gap between its launch and that of M-pesa.
So what sets Mpesa apart? Its phenomenal success of a mobile money service launch that is yet to be replicated elsewhere! Philippines and Kenya have similar mobile phone penetration success but,
Kenya is way ahead of the Philippines in mobile financial services.
M-pesa is proprietary & its design limits its use for cross-border money transfers
From the onset, M-pesa was not designed to scale over cross border money transfers (regulations aside). According to an insider closely involved with the project in its infancy, Mpesa missed a crucial early stage window of opportunity to expand into Uganda, Rwanda, Tanzania and South Africa as a unified system from day-one.
“At a very interesting meeting with CEO Michael Joseph and some Execs, we created a unique roadmap where both projects would merge and M’Pesa would be de facto available to all mobile users in eastern Africa, not only for domestic but cross-regional transfers.”
This answer here, expands on events leading up to this in 2009.
It is no surprise therefore, Safaricom is now attempting to penetrate the cross border money transfer market; a highly lucrative market for that matter!
M-pesa P2P transactions are reversible at the request of the sender
Person to person transactions via M-pesa are subject to TOC. Under one of these statements, M-pesa can legally reverse a transaction at the request of the sender/payer. This means that as long as you haven’t withdrawn Mpesa into cash, the sender can call up Customer care and ask them to return the funds – whether you like it or not.
As an intermediary, Safaricom by default sides with the sender. It is upto to you( the receiver) to follow up the case with Safaricom and prove otherwise.
So next time you receive money from someone, and you’re not sure about their intentions, head over to an agent and withdraw into cash as fast as you can!