Your Money is Safe in KenyaPeter Reville |
Early last year I posted a blog about how M-PESA, a SMS mobile payment solution was single handedly causing inflation in Kenya. Well, they continue to amaze, this time in a good way.
A recent article on Kenyan news site The Star reports M-PESA’s fraud losses are well below one percent. According to mobile supplier Safaricom, M-PESA’s parent company, M-PESA’s average fraud losses were 0.006 percent of each transaction, as compared with less than a percentage point in the United States. Compare that, more to the point, with the estimated five percent losses in credit card fraud—a number that in part spurred the development and take-up of M-PESA—that the Central Bank of Kenya reports and you will see that Safaricom has built a very efficient payment system.
Just as a reminder, with M-PESA, a customer can use his mobile phone to move money quickly, securely, and across great distances directly to another mobile phone user. With M-PESA, account holders pay bills, transfer money to peers, and even top up funds and get cash from Safaricom dealers.
Now Safaricom has started to engage retailers to accept M-PESA at the point of sale. This model has been taken to several other developing markets and was most recently launched in India.
This is no little venture we are talking about: Safaricom is processing two million transactions a day. That is what makes this extremely low fraud number so amazing. The beauty of the whole thing is the simplicity of the system—SMS with carrier billing. That’s it.
One of the key findings of MasterCard’s Mobile Payments Readiness Index revolved around mobile as an alternative to otherwise broken payment systems in the emerging and developing world. The situation in the developed world is quite different. But the creation of a safe, very popular and affordable payment service explains why a small and relatively poor East African nation is in the company of countries like Canada and Korea in terms of mobile readiness.
Topics: Payments Strategy