How do I become an MPESA agent

In Germany, the requirements for mobile payment are now quite attractive. According to figures from the Federal Network Agency at the end of 2011, more than 112 million cell phones are being used in Germany. In addition, around 10 million smartphones were sold in 2011. In particular, this new generation of mobile phones is being equipped with more and more functions, which mean that the original purpose, telephoning and sending or receiving short messages, takes a back seat and additional services are in focus.

But even without smartphones, mobile payment systems have been able to establish themselves in some countries, which have meant that the classic pillars of retail banking, payment transactions and overdrafts, are not primarily based in the banking industry, but rather in banking from outside the industry Newcomers was taken over. This becomes very clear in the example of Kenya presented below. In view of the success of mobile payment solutions in other markets, German banks have to ask themselves how they intend to effectively counter this new trend in their home market.

The mobile payment market in Kenya

Kenya has a population of around 41 million and a gross domestic product (GDP) of around US $ 32 billion (2010). This corresponds to a per capita GDP of around US $ 785. This puts the country in 183th place out of 215 in a global comparison (per capita GDP in Germany 41,520 US $)1 and is one of the poorest countries in the world. The inflation rate averaged 10 to 15% in recent years.

Only 15% of Kenyans have access to a bank account. However, 28 million people now have a mobile phone2 - In 2010 there were only about 20 million3 The spread of mobile phones has exploded since 2007, because they are no longer just used for making phone calls in Kenya, but also serve as an electronic wallet (e-wallet) and are also used to take out micro-credits from mobile phone operators. This multifunctionality is associated with the introduction of a mobile payment system called M-Pesa (mobile money). It was developed by the mobile operator Safaricom (market share: 68%) in cooperation with the University of Cambridge, which still operates it today. Just three months after the market launch, the annual target of 250,000 registered customers was exceeded. At the end of the year, M-Pesa had 1.6 million users and by the end of 2011 it had 14 million.4 The success of M-Pesa is surprisingly due to the backward structure of the financial system and the difficult security situation. Kenya does not have a mature banking landscape and it is often dangerous to carry cash.

How M-Pesa works

To become an M-Pesa customer, you first have to register. Registration can be done with one of the 23,000 agents5 in their shops (petrol stations, supermarkets, internet cafés, post offices ...). These in turn are registered at the M-Pesa headquarters. To register as an agent, you need a license for the equivalent of around € 1,0006 acquire. After registering with an agent, the customer receives a SIM card with M-Pesa function, a number and a password. Now he has an account that he can top up and from which he can pay.

The M-Pesa account is topped up again with one of the registered agents. After confirming the identity using the mobile phone and ID, the customer selects the amount to be deposited and pays the amount in cash. The dealer then calls up the M-Pesa program on his mobile phone, enters the mobile phone number and the amount paid in, and confirms the details. Finally, both of them receive an SMS confirming the transaction.7

One of the most important functions of M-Pesa is the transfer of money between private individuals, as Kenyan men, for example, often work far away from their home village and regularly have to transfer money to their wives and families. To do this, first call up the M-Pesa function in the Safaricom menu of the mobile phone and select the “Send money” option. Then the fields "receiving mobile phone number" and "amount" are filled out and the process is completed by entering the PIN. You will be asked whether the information you have entered is correct. The payment process is completed after confirmation. Finally, the transaction is confirmed by an automated SMS to the sender and recipient. If the sender of the money notices after the transaction that he has entered the wrong recipient number, there is the possibility of a reverse transaction if the money is still in the recipient's M-Pesa account.

Although many providers of services and goods in Kenya now have an M-Pesa account, it is still not possible to always get by without cash. If someone wants to turn part of the M-Pesa credit into cash or withdraw it, they go to an M-Pesa agent, they can confirm that they can pay out the desired amount, identify themselves and give their mobile phone number. Then he calls up "M-Pesa" in the menu of his mobile phone and selects the "Withdraw money" function. He then fills out the fields "Agent number", "Amount" and "PIN". A control window will then open, which he will confirm after checking the transaction details. Finally, the agent and customer receive a confirmation SMS, and the customer confirms the process again in the agent's log book with his signature.

It is also possible for cell phone owners who are not registered with M-Pesa to withdraw money. The procedure is similar, but with the difference that you have to have received an SMS from an M-Pesa owner beforehand, which contains a voucher number. The agent enters the number into his device, both actors receive a confirmation SMS again, and the customer is paid the amount.

The acceptance in everyday life

Taxi drivers, craftsmen and other service providers and companies now often prefer to be paid by M-PESA.8 To pay an invoice, the customer selects the "Pay invoice" function in the M-PESA menu on his mobile phone. Then he fills in the fields "company number" and "account number". He receives this information from the seller or service provider. Finally, he enters the amount of the invoice and his PIN and confirms his details. M-Pesa offers other services for both registered and non-registered customers. For an overview, please refer to the company's website.9

Kenya has seen tremendous growth in cell phone sales over the past few years. 71% of Kenyans now have a mobile phone (as of December 31, 2011). The increase is 6% in relation to the previous quarter. During the same period, however, the number of minutes spent on cell phones fell by 5.6%.10 If you divide the total of 6.7 billion minutes of calls made in December 2011 among the individual customers and compare them with the September figures, they even fell by 10.5%.11 The numbers in the area of ​​SMS are even more serious. There is a decrease of 38.5% per user.12

The figures underline that the mobile phone in Kenya is no longer primarily used for making calls. Rather, it has turned into an electronic wallet and a mobile ATM. This is also confirmed by the growth figures in the m-payment area. CHART 1 shows the development in 2011. In contrast to the use of mobile communications, mobile payment is growing both in terms of the number of users and the amount of sums paid in (the values ​​stand for deposits made per quarter).13 It should be noted that the numbers in FIGURE 1 capture the entire mobile payment market in Kenya and not just include M-PESA users and credit. The market is divided among eight competitors who all have a similar business model.

Mobile payment systems based on the M-PESA model have been able to establish themselves in Kenya in recent years and are now also being used successfully in Tanzania and Afghanistan.14 The success of the system seems to be based on the fact that the banking sector and the associated infrastructure (ATMs, branches) in these countries are still underdeveloped. It is often difficult for people in smaller towns and villages to get cash or the loans they need. In addition, the crime rate is high and therefore people do not like to travel with cash. It is above all the enormous gain in flexibility and security that led to mobile payment and mobile banking being accepted by the population and companies.

Further success factors are the relatively easy and free registration, the possibility of

M-PESA for paying very small amounts (minimum: 9 cents), which is extremely important for large parts of the population in Kenya, and the low fees compared to other money transfer methods. FIGURE 2 shows an extract from the M-PESA fee list.

Although the fees amount to up to 30% of the transferred amount, they are still far below the amounts incurred with competing transfer methods such as Western Union, Money Gram or Post. With these, there are significantly more than 100% transaction costs for smaller sums (0.09 to 45 €).15 The provider Safaricom also sees M-PESA as a success. In 2011, the company made 12.4% of its sales with M-PESA (converted

108 million €). It is to be expected that the share of total sales will continue to rise (growth rate of the M-PESA

Sales from 2010 to 2011: 56%).16


In summary, it can be said that mobile payment in Kenya has been accepted by the broad masses as a common means of payment because it brings enormous economic and sociological added value and bridges inadequacies in the financial landscape. Remarkably, a payment and credit landscape developed in Kenya past the banks with modern communication technology and driven by companies that were alien to the banking industry. This makes Kenya an example of a country on the way to disintermediation, only that there has never been a developed financial intermediation here. The German institutes active in retail banking would do well to carefully monitor this development and develop strategies on how to deal with the possible success of mobile payment systems from competitors from outside the industry.


Prof. Dr. Dirk Schiereck is the owner

of the Chair of Corporate Finance

at the Technical University of Darmstadt. Artur Tielmann is a research associate at this chair.

1 See World Bank, 2011, p. 3.

2 See Communications Commission of Kenya, 2012, p. 6.

3 See,1518,670684,00.html.

4 See

5 See

6 See Safaricom, 2010, p. 1.

7 See

8 Safaricom has published a list of all companies registered with them. This is available at

9 Safaricom M-Pesa URL:

10 See Communications Commission of Kenya, 2012, p. 6.

11 See Communications Commission of Kenya, 2012, p. 12.

12 See Communications Commission of Kenya, 2012, p. 15.

13 See Communications Commission of Kenya, 2012, p. 11.

14 See IFC 2010, p. 2.

15 See Mbiti, 2011, p. 10.

16 See Safaricom, 2011, p. 6.

17 N / A means that this service is not possible.


IFC. "M-Money Channel Distribution Case - Tanzania." June 2010: 1-18.

Communications Commission of Kenya. "Quarterly sector statistics report." April 2012: 1-29.

Mbiti, Isaac, and David N. Weil. “Mobile Banking: The impact of M-PESA in Kenya.” June 2011: 1-53.

Safaricom. "FY 2011 Results Announcement." May 2011: 1-26.

Safaricom. "M-PESA Agent Requirements." July 2010: 1-3.

World Bank. “Gross national income per capita 2010, Atlas method and PPP.” July 2011: 1-4.