23 February 2010

Mobile Money ~ Jack & Suri on Kenya's M-PESA

Excellent to see Georgetown's William Jack and MIT Sloan's Tavneet Suri's paper on Mobile Money: The Economics of M‐PESA spotlighted by MIT today as Banking on mobile money by Peter Dizikes. As Jack & Suri write...
"In March 2007, the leading cell phone company in Kenya, Safaricom, formalized this procedure [of the informal use of airtime minutes as cash] with the launch of M‐PESA, an SMS‐based money transfer system that allows individuals to deposit, send, and withdraw funds using their cell phone. M‐PESA has grown rapidly, currently reaching approximately 38 percent of Kenya’s adult population, and is widely viewed as a success story to be emulated across the developing world. This paper provides a description of the service and a review of the potential economic effects primarily at the household level, but also in terms of macroeconomic and monetary aggregates. It then provides a detailed portrayal of patterns of use across urban and rural populations, using data from the first large household survey focused on money transfer services in Kenya."
This is one of several interesting cases to study and draw lessons from!

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