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M Pesa Present

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Lan Chi Vũ
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70 views2 pages

M Pesa Present

Uploaded by

Lan Chi Vũ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Introduction:
M-PESA, a mobile payment system launched in Kenya in 2007, provides banking services via mobile
phones, allowing users to deposit, withdraw, transfer funds and pay bills. By 2013, M-PESA had 16
million users and processed many transactions. The system has a simple operating model; users pay one
of 40,000 M-PESA agents, they can withdraw money by visiting another agent, and the system can also
be used to send money to others via a simple menu on the phone.
2. Innovation Dimentions:
- Developing a simple and easy-to-use mobile payment system
- Network Effects
- Leveraging existing mobile infrastructure
- Supportive and flexible government policies
- Building a strong brand
- Business model based on small commissions but high volume
3. M-PESA's key innovation method: Network effect
o The Mechanism of Network Effects in M-PESA
- Rapid growth through word-of-mouth: Kenya, like many African societies, is heavily
dependent on personal relationships and word4of4 mouth represents a key way for ideas to
spread. In the case of M-PESA this helped build up the network effect; essentially without a
critical mass of people connected to the system it doesn’t offer much advantage. But the more
connections there are the more attractive the system becomes. The effectiveness of word of
mouth is proven through the fact that soon after the system was launched it was attracting new
subscribers at the rate of 12,000/day, quickly building a critical mass for network effects to
operate.
o Creating Increasing Value as the Network Expands
- Enhancing connectivity and transactions: The widespread connectivity then enabled other
services such as loans, salary payments and bill payments to be added which reinforced the value
and drew more subscribers into the network. This network effect extended beyond the phone use
itself to the network of retail stores able to offer the service so that people could deposit and
receive money. A Finaccess survey in 2006 revealed that 27 per cent of the population derived
their main source of income from transfers from other people but at that time most of the senders
(75%) were using informal means such as the bus and friends and family. By 2009 M-PESA had
replaced informal transfer mechanisms and was used by 40 per cent of sender whilst the number
of people involved in receiving transfers had increased to nearly half of the population
o Network Effects and Social Impact
- Supporting unbanked communities: One of the greatest benefits of network effects is
providing financial services to those without traditional bank accounts. This is important in the
context of a country where 80% of the population do not have access to the traditional banking
system.
- Saving time and costs for users: Network effects not only make the system convenient but also
save time and costs for users. The effects on productivity on people who would otherwise spend
a lot of their time carrying out multiple journeys, queuing and other activities have been
significant and evidence suggests that the effect has also been to raise household incomes by
between 5% and 30%.
4. M-Pesa Outcomes:
o M-Pesa has achieved remarkable success in the mobile payments space in Kenya and other
countries. Some of the key components of this enterprise business include:
- Rapid growth: M-Pesa has attracted a large user base and achieved significant revenue growth.
- Widespread adoption: The service has become a popular payment method in Kenya, making
financial services more accessible to people.
- Reducing the use of cash: M-Pesa has contributed to reducing the use of cash, helping to
improve the safety and efficiency of transactions.
- Creating new business premises: M-Pesa has opened new business premises for businesses and
individuals, from providing services to selling online.
- Contributing to economic development: M-Pesa has contributed to promoting economic
development in Kenya by creating jobs and increasing trade transactions.
5. Lesson based on M-Pesa case study:
- The development and introduction of M-Pesa followed that pattern of learning and growing the
new market outside of the mainstream financial or communications services market.
- M-Pesa began with small pilots involving fewer than 500 people to learn quickly about the
technological and user issues involved in the innovation.
 The lessons learned helped them set up a launch infrastructure which had 750 stores widely
distributed and covering all the 69 administrative regions in Kenya.

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