A recent banking service in Kenya called M-PESA (M for "mobile" and pesa for "cash", in Swahili) was launched in 2007 as one of the world's first cellphone-to-cellphone cash-transfer services for people who lack access to conventional banks. According to the author, "On a continent with more than 225 million cellphone users – double what it had just two years ago, according to World Bank statistics – the impact could be profound on poor families' ability to save for a house, plan for emergencies, or get a loan."
The account setup uses existing mobile technology: a customer selects from a short menu on the cellphone screen, which features options including "send money" and "withdraw cash." The person receiving the transfer on his or her phone can visit an M-PESA agent or participating gas stations or stores to pick up the money. The initial success of M-PESA is its surprising growth, according to Gerald Rasugu, the manager for M-PESA agents nationwide. M-PESA serves more than 450,000 customers (as of October 2007), well over the target of 100,000 set at launch by Safaricom, Kenya's largest cellphone provider, which started M-PESA. The company expects to have 1 million customers by January 2008.
As stated here, "the potential goes beyond M-PESA and Kenya. Once poor people have more access to financial products offered through trusted banking systems, investors soon follow, creating jobs, say economists." According to Thorsten Beck, a senior economist at the World Bank in Washington, United States (US), "There's a very clear correlation between a more developed financial sector and gross domestic product (GDP) growth." Also, as stated by the author, "Recent analysis by the World Bank shows that nearly 30 percent of the difference in changing poverty rates between countries could be attributed to financial-sector development."
There is concern about regulation of this new form of banking because lack of regulation could result in fraud or bankruptcy, damaging consumer confidence. However, strong growth rates of the M-PESA system seem to indicate current consumer satisfaction and utility of the system.
