Role Of M-Pesa Business Solution In Developing Economies

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Each and every day companies yarn for the better strategies that they can use to increase profits, growth and development while ensuring total satisfaction of their customers. In the last five years, Kenya has witnessed incredible growth and development of the economy as a result of the M-PESA business solution. Never in history has there been technology that was adopted faster than the rate at which mobile phones have been adopted by people all over the world and this explains the quick success of mobile money and the M-PESA business that is used in Kenya. In this article therefore we are going to exploit all the details concerning M-PESA business solution, its background, the role of this approach, its achievements, its competitive advantage and so many more details that will help you understand the concept better.



According to a study conducted by Ernst & Young in 2010, it was discovered that the telecommunication industry developed by over 49.3% in Kenya as compared to Asia which makes this industry one of the fastest growing industries in the whole of Africa and particularly Kenya standing out with the highest percentage of subscribers. To make the M-PESA business solution even more effective, Kenya amended the Kenya communication Act that ensures better facilitation of this business solution. The major role of M-PESA business is to deliver voice communications solutions and mobile converged data whereby the most commonly used service is the transfer of money using a mobile phone. M-PESA financial services are divided in two distinctive ways;

  1. Mobile money transfer; this is a field on its own that doesn’t include banks or banking services, it is the sending and receiving of money through a mobile phone. This service is overly being used because of its level of convenience, attracts lots of customer and makes service delivery extremely easy.
  2. Mobile banking; this in simple terms can be described as access of financial services through the use of mobile telecommunication devices. With the internet the long queues in banks have been greatly reduced reason being there are now new ways of conducting the different bank transactions.

M-PESA business solution is a service from SAFARICOM which allows people to make money transactions using mobile phones. The M-PESA business was initiated in 2007 and Kenya was the very first to adopt the technology. Unlike other businesses that return profits on deposit and offer loans, M-PESA doesn’t offer the same but it is looked as a more accessible bank through which one can easily and quickly make money transactions. Once you have a SAFARICOM cell phone line, the first thing you have to do is register it on M-PESA and thereafter you will able to deposit money on your account under the registered user names. Depositing is totally free however withdraws cost a few shillings. M-PESA also allows you to transfer funds from your account to another person’s account


Now after that background about M-PESA business solution, we all have enough knowledge about the whole concept it is now very easy to break down its role;

  • Facilitates secure money transfers

While you go out to far distances or have relatives far away from you there is no need to worry, as long as you have their registered M-PESA number because you will be able to send them money and be rest assured they will receive it without any mistakes and within a very short period of time.

  • Safe storage of money

For people who don’t believe in putting their money in the bank but need a safe way to store their money M-PESA is definitely the best solution to it all. It has been discovered by studies and research that the business technique is very good in increasing net household savings.

  • Improves allocation of transactions

Because of the way it improves inter-personal transactions M-PESA is overly being adopted by people who participate in these frequent transactions. Using M-PESA you can send money directly to your business partner without any third parties involved and because they will receive there and then, you will never be worried about your money being misplaced or swindled by someone who is unauthorized. Yes mistakes may occur sometimes but it is on very rare occasions that money will be transacted wrongly hence enhancing proper allocation of transactions.

  • Improves investment of capital

Through M-PESA people that stay in town areas can make investments in rural areas where costs of living are cheaper. For example a rich man in town can own a farm deep in the village and use M-PESA to send money for capital and several other facilitations. They will not even need to be present all of the time as long as they have any easy way of making transferring money to and from the business that is so far away. This way you can be able to make investments without incurring the high costs of investment.

  • Facilitates trade

Trade is the buying and selling of goods and services and the growth of M-PESA business solution has been of great help in making transaction of goods very smooth, quick and easy. Lately payment of house bills such as water bills and electricity bills can be done through M-PESA by simply pressing a few buttons and following a very short procedure. It is also possible to top up credit on your mobile phone using M-PESA which has eliminated the need to walk around streets with huge sums and bundles of money. M-PESA is definitely the way to go for all people more so for people that are always on the move, you will never run out of money when you have an M-PESA account.

  • Allows quick transfer of small amounts of money

In cases where even the smallest amount of money can be of help M-PESA has been of great, these include cases of emergency for example when a person is sick and needs to receive money for hospital bills as soon as possible, it will take only a few minutes to make those small money transfers that need to be done with immediate effect. Without M-PESA it would be overly difficult for one to make such urgent small money transactions and at an extremely low cost.

  • Alters bargaining power

With M-PESA you don’t need to have any bargaining skills, at any particular time you can make your transactions and have your money ready just the way you want it. Considering the rate at which people in urban areas can easily send out money to those in rural areas there is no need of them having to worry about moving to town areas to bargain to get a given amount of money. All they need to do is have their cell phone lines registered and then move to an agent where they can receive the money whenever they need it. Such geographical boundaries have been broken by the growth in numbers of people that can use M-PESA business solution.

  • Customer convenience

When you think about the how long it would take for you to travel and meet a person to pick some money or just lining in the queues in the bank to wait to either withdraw or deposit your money you will greatly appreciate the initiation of M-PESA business solution which has made all those services much more convenient. With this business technique you will have your funds on your mobile phone and withdraw at anytime you feel like without any difficulties or if you like you can send someone else money with the same incredible convenience. Even when you want to access funds from your bank account you can still use M-PESA. Because of the high level of convenience offered by this business solution so many people are adopting the strategy. Year after year the number of people using M-PESA never drops down but rather keeps increasing.


Ever since M-PESA business solution was implemented it has done nothing besides develop and grow every other year and one would look at the system and wonder what exactly is causing the amazing development of this business solution. M-PESA’S competitive advantage is attached to mainly these three reasons;

  • Constant need for financial services; according to the 2007 national survey it was recorded that over 38% of the people in Kenya were not exposed to such developed forms of financial services and only a very small percentage of about 19% had access to the formal financial institutions like banks. However as soon as M-PESA was introduced a very large number of people adapted to it because of the how easy it makes money transactions, its accessibility which has no time limit like the banks do and it doesn’t require a lot of money for you to open up an account with M-PESA. For those who own small businesses and those who have trouble opening up bank accounts M-PESA has become the perfect solution as it eliminates the need of going to the bank every other time. M-PESA has now become the simplest way for people to save their money and also run their errands at all times.
  • Low transaction costs; depositing is completely free while withdrawing and sending money only costs a few shillings, this has beaten competition from the banks where transactions cost more. Considering the way banks offer their services and how they operate, it would be impossible for them to perform transactions as low as M-PESA transactions and this has enabled the M-PESA business solution to penetrate into the economy.
  • High rise in use of mobile phones; in the present day it is weird for someone not to own a mobile phone, in this century almost everybody owns or at least can access a mobile phones and this is one of the biggest reasons as to why M-PESA business solution has become overly used by people all over Kenya. In East Africa, Kenya stands out as the country with most developed mobile market and statistics show that over the years the number subscribers has increased all the way to more than 16 million. Because SAFARICOM that owns M-PESA has the largest number of subscribers, this has greatly helped the business solution to penetrate the market and beat all the rest in competition.


As we come to the end of this post, it is important to take a look at some of the key highlights of M-PESA business solution and below are some of them;

  • To deposit money on your M-PESA account, you just have to hand cash to an agent and they will deposit the exact amount onto your account.
  • The key requirements for using M-PESA include SAFARICOM mobile number, identification and register at an authorized M-PESA agent in order to starting enjoying the various M-PESA services. You don’t need to have a bank account for this particular service.
  • Sending money on M-PESA doesn’t only have to be between SAFARICOM users, as long as you have money on your account, all you need to do is have follow SMS instructions and you will be able to send out money to anyone even those using different networks.
  • Anyone can receive money from M-PESA but only SAFARICOM users or subscribers have the ability to send money through M-PESA.
  • With M-PESA you can load airtime for yourself or for someone else and you will have to withdraw cash from an agent.
  • Considering how efficient M-PESA is, it has been able to work together with over 40 banks and non bank institutions in delivering better services to the people. It is that effective in its duties.
  • Customers are free to access money from their M-PESA accounts at just any hour of the day. SAFARICOM partnered with Equity bank Kenya which is one of the most efficient banks therefore anyone registered under the M-PESA service can withdraw money from the Equity bank ATM points without using an ATM card. This service has overly drawn more and more users to the use of M-PESA.
  • You can withdraw money from your bank account through MPESA services, it has over 300 bank branches that deliver their services.


Vanilla Farmer, Amazon Retailer & Tech Researcher. Yosaki is my personal blog but I'm working on some big tech project back doors. I will keep on posting various topics on things I have knowledge about.

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