M-Pesa M-PESA is a mobile payments system originally developed in Kenya which effectively offers a banking system based on mobile phones. Launched in 2007 it is now used by 1.7 million people and estimates suggest that around 25% of the countrys gross national product flows through the system. The name comes from the Swahili pesa meaning money and the original idea began as a development aid project to enable microfinance repayments. Vodafone, via its local operator Safaricom, became the project partner and rolled out the service. Currently (2013) around 16 million people have M-PESA accounts and the system processes more payments than Western Union does across its entire global network. The system is simple in concept; users pay money in to one of 40,000 M-PESA agents (who usually operate in small corner shops) who sell airtime on the Safaricom network. Withdrawals can be made by visiting another agent and the system can also be used to send money to other people via a simple menu on the phone. Many people work in cities but send money back to relatives in their home villages and M-PESA allows them to do this safely without the risks of robbery or the inconvenience of having to make the journey. One of the emergent benefits was that during the 2008 post-election violence people began

to see M-PESA as a safer place to store their money than mainstream banks. The basic M- PESA service allows users to: Deposit and withdraw money Transfer money to other

users and non-users Pay bills Purchase airtime Transfer money between the service and a bank account (in some markets) and the service is funded by a small commission fee for each transaction. (The cumulative effect is large though; estimates suggest that M-PESA accounts for over 10% of Safaricoms annual revenue). There is a cap on transactions of $500 making it difficult for money laundering or other applications. the average transaction size is around US$33, but Vodafone has stated that half the transactions are for a value of less than US$10.

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Q4. Identify two (2) pains the M-PESA innovation reduced ? (10 Marks)

Q5. The M-PESA innovation can be described as an incremental innovation assess this statement highlighting three (3) factors. (15 marks)

Q6. On a rating scale of 1 to 10 with 10 being the highest how replicable would the M-PESA system for other countries, justify your answer outlining g three factors. (15 Marks)

Total 40 Marks