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Index Award 2013 Finalists
M-PESA
Mobile banking booms in Africa

In 2007, following a student software development project from Kenya, Safaricom launched a new mobile-based payment and money transfer service, known as M-PESA. M for mobile and PESA for Swahili currency. M-PESA is currently the most developed mobile payment system in the developing world. It allows users with a national ID card or passport to deposit, withdraw or transfer money without needing to visit a bank. This incredibly reliable and corrupt-free design is making monetary transactions and payments available for millions of people in Africa. 

The Challenge of Money addresses issues surrounding the distribution of wealth, welfare, and financial opportunities. A survey carried out by the World Bank in 2012 showed that 50% of adults in high-income economies such as the West have credit cards, whereas just 7% of adults in the developing world posses a credit card. But it’s not just the developing world that is not serviced by banks and credit cards, there are 9 million “unbanked” American households that sit on the periphery of the economic system.

Two of the most cited reasons for not having a bank account are excessive paperwork and lack of access to banks. Mobile banking however overcomes these obstacles since it is practically paperless and accessible 24/7. Furthermore, by 2014 the number of mobile phones will exceed the world population, meaning that the vast majority of people will possess a mobile phone, putting the power of banking at their fingertips.

M-PESA, launched in 2007 by Safaricom, is a fast, secure, and convenient way to transfer money with a mobile phone. Since its inception, M-PESA has serviced 40% of Kenya’s adult population. And impressively a third of Kenya’s GDP now flows through M-PESA. What is more - set against the disenchantment with the banking industry wrought by the 2008 Banking Crisis, M-PESA is corrupt-free and transparent.

Hospitals send money by text message to patients in remote areas to pay their bus fare to travel to hospital for urgent surgery. Coffee growers pay their field workers promptly by text messages. And urban dwellers regularly send money back home to their rural families. With M-PESA you can send money anytime, anywhere, and to anyone.

The potential of this design is immense. Not only in what it can do in the developing world, but also what it can do for developed countries. We suspect that sooner rather than later the system with trickle down to reach the rest of the world and fundamentally change banking as we know it, making it more straightforward, simple, and transparent.