E-money is quickly becoming a popular medium of exchange in Kenya, where M-Pesa consistently reads market trends and promptly fills the gap. The service started only 3 years ago, offering basic financial services like money transfer, cash deposit and withdrawal, to name a few. According to a recent Forbes blog post, How Africans Shop With Their Cell phones, the service range has quickly expanded to target different market segments.

The service offered great utility to domestic migrant workers who previously sent cash to their homes in rural areas via bus drivers. M-Pesa provided a safe and efficient alternative, through which millions of unbanked people gained access to formal financial services. Within a matter of years, the financial tool grew to serve around 12 million customers who transacted around $5.4 billion through text messages.

Kenyan regulation allowed Safaricom to operate M-Pesa without relying on a bank to safeguard public funds. While this was a major incentive, the flip side of the coin was the limited range of financial services Safaricom could offer. Since lower-income groups have complex financial needs (as witnessed in Portfolios of the Poor), Safaricom launched M-Kesho in 2010 to address this demand-supply gap.

M-Kesho was the result of collaboration between Safaricom and Equity Bank, which provided two long-term benefits from the financial inclusion perspective:

• Microfinance services could be administered through mobile phones, improving outreach and processing efficiency (automated systems replaced manual systems), and
• The unbanked population was now hooked on to the financial sector.

The list of accomplishments doesn’t stop here. The Forbes article goes on to mention the recent partnership between M-Pesa and major departmental stores in Kenya which allows customers to pay for goods through their mobile phones.
Kenya is on its way to harbouring a cashless society; what an unlikely achievement this appeared to be 5 years ago.

Be sure to read the original Forbes article.