Role reversal as M-Pesa expands in Europe

August 13, 2014
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, MPESA

Africans have long used technology developed abroad, but now a Kenyan cash transfer network which bypasses banks is being adopted in Europe.

The M-Pesa mobile money transfer system which allows clients to send cash with their telephones has transformed how business is done in east Africa, and is now spreading to Romania.

“From east Africa to eastern Europe, that’s quite phenomenal when you think about it,” Michael Joseph, who heads Vodafone’s Mobile Money business, told AFP in the Kenyan capital Nairobi.

“I think that this is something the rest of the world can look at, to say that there are ideas that can emanate out of the developing world, and take it to the developed world.”

M-Pesa — or “mobile money” in east Africa’s Swahili language — was introduced in Kenya in 2007 by Safaricom, the country’s largest mobile telecommunications company, in partnership with British giant Vodafone.

Since then the service has grown exponentially, with about $40 billion (30 billion euros) flowing through the service in Kenya alone.

In Kenya, the system has become a part of daily life, with more than 18 million customers, and is used by almost two-thirds of the population with more than eight million transactions daily.

The network allows customers to bypass the traditional banking system, using an application available on the simplest of mobile phones to pay utility bills, buy a drink in a bar, or send cash to family and friends.

Boon for cash economy

Romania is the latest nation Vodafone is tapping, with its first European launch last March.

For Michi Carstoiu, an engineer in the capital Bucharest, M-Pesa complements established online payment services.

“Most importantly, I save time – plus I think the transaction fees are smaller,” Carstoiu told AFP, shortly after activating his mobile phone account at one of the 1,000 outlets already open.

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