Mobile money is a form of electronic money that allows people to conduct transactions using mobile phones. It allows financial services to be extended to unbanked people at a significantly lower cost because physical infrastructure isn’t needed. Mpesa is an example of mobile money that s rampantly used in Kenya. According to a study on the long-run effects of mobile money on economic outcomes, increased access to mobile money has reduced poverty in Kenya, particularly among female-headed households. This article outlines the important of mobile with reference to Mpesa and its penetration across the world starting from Africa.
Today, majority of people in Africa and also in the world own mobile phones. The growth in mobile phone ownership raises the potential for mobile money to reach unbanked people, providing them with a more affordable payments system. Mpesa, as Africa`s first mobile money platform was launched in Kenya n 2007. Today, 96% of households that are outside Nairobi are having at least one mpesa account.
M-PESA has significantly reduced transaction costs in Kenya. When it was launched the average distance to the nearest bank was 9.2 kilometres. Eight years later in 2015 the average distance to the nearest M-PESA agent was a mere 1.4km. When Mpesa started, it created many agents in different areas. This made it easy for them to reach more people both in urban and rural areas.
Previous studies on the impact of micro-finance on female clients, and on the economic returns to capital grants for female-operated small businesses, have tended to show limited results which have significant implications for policy and poverty-reduction efforts. With more services offered on mpesa for instance loans access and savings accounts, it is more likely that the economy will grow as small businesses can access loans. Also the transaction cost for mobile money is cheaper than that for banks and this makes it more reliable.
Mpesa has been seen in Uganda and Tanzania and this shows that it is penetrating to other countries starting with the east Africa. Also debates on whether to employ mobile banking in the developed countries have been done and soon they will start employing the Mpesa services. This will make it spread across the world in the near future.
Therefore, today Mpesa spreads on east Africa and soon the globe will start employing the technology. Mpesa also brings a positive outcome when it comes to the growth of the economy.