1. (Mobile) Payments, lessons from M-Pesa?
Ruud van der Horst, consultant
June 2011

2. (Mobile) Payments, lessons from M-Pesa?
Agenda
What is M-Pesa?
Pre-paid mobile phone
Microfinance
“Mobile” microfinance business flow
What could this mean for Romania?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

3. (Mobile) Payments, lessons from M-Pesa?
A Mobile Payment Provider (MPP), created by Vodafone and Sagentia (
Millions of subscribers
Takes care of money transfers of (relatively) low amounts for B2C, C2B, B2B and C2C
A subscription (=account) with M-Pesa is necessary, however no bank account is needed
money must be stored with M-Pesa, before any transfer can be made
there is a maximum to the amount which can be stored in M-Pesa
Makes use of simple SMS protocols
A very simple mobile phone is enough to use M-Pesa
Safaricom’s (=M-Pesa) local shops are used to store/get out the money in/from M-Pesa (in pre-paid phone terms: credit is bought in the local shops)
Up till now no fraud issues in the media
Is seen as that trustworthy that many accounts have (small) deposits with M- Pesa, although M-Pesa does not give any interest on the deposits
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

4. (Mobile) Payments, lessons from M-Pesa?
Agenda
What is M-Pesa?
Pre-paid mobile phone
Microfinance
“Mobile” microfinance business flow
What could this mean for Romania?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

5. (Mobile) Payments, lessons from M-Pesa?
Pre-paid mobile phone
A subscription (=account) with a provider is necessary
money needs to be stored with that provider
any time contract services are used, the pre-paid credit with the provider decreases
Millions of subscribers
SMS services provided
A very simple mobile phone can do the trick
Credit can be bought in many shops
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

6. (Mobile) Payments, lessons from M-Pesa?
Agenda
What is M-Pesa?
Pre-paid mobile phone
Microfinance
“Mobile” microfinance business flow
What could this mean for Romania?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

7. (Mobile) Payments, lessons from M-Pesa?
From Wikipedia
Microfinance is the provision of financial services to low income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services.
More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers."
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

8. (Mobile) Payments, lessons from M-Pesa?
Agenda
What is M-Pesa?
Pre-paid mobile phone
Microfinance
“Mobile” microfinance business flow
What could this mean for Romania?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

9. “Mobile” MF Business Flow (MF and M-Pesa)
Loan applicant
Applicant needs an account with M-Pesa
Group Formation
All members need an account with M-Pesa
Group Acceptance by MFI
M-Pesa account is important part of static data of MFI clients
Training / saving
How to use M-Pesa account for loan processing
Loan application
Application is “conditional” contract
Loan approval/Contract
After Group approval, same day MFI approval
Travel to MFI/Wait for your turn/Receive money/Try to get money to destination and do not get robbed...
Money transferred to Applicant M-Pesa account
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

10. “Mobile” Business Flow
Loan repayment
Travel to MFI (or Bank) and try not to get robbed/Wait for your turn/deposit money and do this as many times as your repayment schedule indicates....
Money transfer from client (“applicant”) to MFI
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

11. (Mobile) Payments, lessons from M-Pesa?
Agenda
What is M-Pesa?
Pre-paid mobile phone
Microfinance
“Mobile” microfinance business flow
What could this mean for Romania?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

12. What could this mean for Romania?
There are great expectations for the usage of mobile phones in “the payment landscape”. However, what is worked on (and implemented) in Europe, USA and Asia is based on advanced technology.
There are easier ways to start if we learn from the “Mobile” business flow in Micro Finance:
If transfer amounts are low, simple (low cost) SMS confirm protocols, suitable for the most basic phone, do work.
The infrastructure used for “normal” payments can easily be adepted to support mobile payments. We have done it with qPayIntegrator.
Pre-paid mobile phones have same characteristics as a debit card. Why not fully use these possibilities...
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

13. What could this mean for Romania?
Issues to be solved:
Is a legal framework necessary? (e.g. Kenya with > 10 million subscribers works up till now without such framework!)
B2C, C2C and C2B has to work (easier than use all retail shops as cash office)
(Cooperation between banks)
User confidence
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

14. What could this mean for Romania?
Issues already solved:
High penetration of mobile phones (currently the mobile penetration is at about 115% - active users only; source Wikipedia)
SMS traffic from banks
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?

15. What could this mean for Romania?
Why use this model?
Support for easy money flows from (over)banked areas to under banked areas/individuals. (One of the objectives of Microfinance)
To be considered for WR, pensions, wages etc.
Worth to start building the business case?
November 12, 2019
(Mobile) Payments, lessons from M-Pesa?