Kenya is pretty much the only place where mobile money works. Now, it seems, the banks want to wreck it.

From The Register

“Vodafone-owned mobe operator Safaricom runs M-Pesa, the poster child for mobile payments. It has revolutionised the lives of people who were so poor that the banks were not interested in serving them.

However, having become the dominant force in the Kenyan economy, the banks quickly moved with the regulators to ensure that the success of a non-bank organisation offering banking services was not replicated anywhere else.

Of course, this was dressed up with plenty of stick along the lines of “funding terrorism”, “money laundering” and “know your customer”, alongside carrots of “co-operation” and “responsibility”. The truth is that nowhere has been as successful with mobile payments as Kenya has, thanks to bank-inspired regulation hampering progress throughout the rest of the world.

Caught off-guard, Tim Murdoch, the architect of M-Pesa, told me: “It worked because they didn’t see us coming”. In truth, Vodafone didn’t see the exceptional success of M-Pesa coming either.”


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How China And Kenya Are Winning The Payment Wars - And Why The U.S. Should Worry

From Forbes

“The U.S. lags the rest of the world in one significant technological area: payments. One reason we’ve fallen behind is the inertia of our legacy payments infrastructure, and the fact that it is more difficult to replace a working system than build one from scratch. Yet, while many Americans consider alternative payments non-essential, the rest of the world is silently surpassing us. They’re building simpler, more secure commerce networks — and perhaps constructing the rails to leapfrog the U.S. economically in the process.

Ingenious workarounds in areas with major political and infrastructural challenges can serve as a model for the U.S. to advance our payment system, prevent security breaches and conduct business in untapped markets.’

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Europe adopts Kenyan banking technology

From 3 News

‘Africans have long used technology developed abroad, but now a Kenyan cash transfer network which bypasses banks is being adopted in Europe.

The M-Pesa mobile money transfer system, which allows clients to send cash with their telephones, has transformed how business is done in east Africa and is now spreading to Romania.

"From east Africa to eastern Europe, that's quite phenomenal when you think about it," Michael Joseph, who heads Vodafone's Mobile Money business, told AFP in the Kenyan capital Nairobi.

"I think that this is something the rest of the world can look at, to say that there are ideas that can emanate out of the developing world, and take it to the developed world."

M-Pesa - or "mobile money" in east Africa's Swahili language - was introduced in Kenya in 2007 by Safaricom, the country's largest mobile telecommunications company, in partnership with British giant Vodafone.

Since then the service has grown exponentially, with about US$40 billion flowing through the service in Kenya alone.

In Kenya, the system has become a part of daily life, with more than 18 million customers, and is used by almost two-thirds of the population with more than eight million transactions daily.

The network allows customers to bypass the traditional banking system, using an application available on the simplest of mobile phones to pay utility bills, buy a drink in a bar, or send cash to family and friends.

Romania is the latest nation Vodafone is tapping, with its first European launch last March.

For Michi Carstoiu, an engineer in the capital Bucharest, M-Pesa complements established online payment services. ’

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Kenya's matatu bus system to go cashless

From BBC News

“Public transport in Kenya is going cashless as buses switch to new electronic fare payments.

From now on, the country's famously chaotic matatus, the minivans and buses that are used widely by Kenyan commuters, have been instructed to change to the new system.

But a Tuesday deadline for all buses to implement the cashless payments, or face fines, has been relaxed.

The sector's regulator has said that adoption will be gradual.

At least three companies are already using the new fare system, which operates in a similar way to London's Oyster card, with passengers pre-loading plastic cards with money and swiping them across a reader on board.

Customers can top up at agents, or by using mobile phone money transfer service M-Pesa.”

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The world's unlikely leader in mobile payments: Kenya

From Tech Republic

“M-Pesa, Kenya's mobile payment system, has revolutionized mobile technology for millions and provides the majority of the country's citizens with banking access, no matter how isolated they are.

It's easier to pay for a cab ride in Kenya on your mobile phone than it is just about anywhere else in the world. Almost 80% of people with cell phones use them for mobile payment and banking (and three quarters of the people in Kenya own cell phones), primarily through the M-Pesa system. Half of all mobile money transactions in the world take place in Kenya, where annual transfers have reached $10 billion.

About 60% of Kenyans living on less than $2.50 a day have mobile phones. Kenyans, even those at the bottom of the economic pyramid, have adopted the technology faster than any other African country. This rapid adoption was spurred by the invention of M-Pesa, which was created in 2007 by Safaricom, Kenya's leading mobile service provider.”

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Which developing nation leads on mobile payments? Kenya

From Pew Research Center

“Kenya is on the forefront of a banking revolution; a majority of Kenyans (56%) make or receive payments using cell phones. The number of Kenyans engaged in this activity is higher than any of the other 24 countries surveyed in our spring 2013 survey. In fact, only in neighboring Uganda do even a plurality of people say they use their cell phones for mobile banking transactions.”

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Google moves into Kenya’s payments market

“Google has teamed up with a leading Kenyan bank to launch a pre-paid card for bus travellers, in what it says is a first step to a wider involvement in the country’s mobile payments market.

The US firm has partnered with Equity Bank to offer an NFC-based card called Bebapay that enables travellers to purchase tickets on the country’s buses.”

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The M-Pesa Story

The world's most notable mobile banking system is M-Pesa, which was launched in Kenya in 2007. The following animated video, narrated by Michael Joseph the managing director of mobile money at Vodafone and the program's founder  walks viewers through the development and success of M-Pesa.

The world's largest mobile pay network is ... in Kenya?

When it comes to mobile banking, Kenyans are the early adopters. About 90 percent of the people in the developing nation access the Internet using mobile phones. Combine that with the popularity of mobile banking service M-Pesa, and Kenya is leading the way.

Mobile money, the ability to bank using mobile phones - is a game-changer in global development. This video chronicles M-Pesa, a mobile money product made by Safaricom, and its unparalleled success with mobile banking in Kenya, and delves into the question of why its success has not been easily replicated elsewhere.

The M-Pesa Story — and Google’s Attempt to Replicate It

How is a third world tech country paving the way when it comes to the future of mobile banking? 90 percent of Kenyans use their phones to access the internet and M-Pesa is bringing mobile banking to the nation.

“The only significant change in money since credit cards, 60 years ago, is M-Pesa. The transaction costs for it are so minimal that banks cannot compete with it.” These are the word of Erik Hersman, Founder, iHub.

The story of Kenya’s M-Pesa network, launched by Safaricom, is well known. But did you know Google is working on a similar system?

Bloomberg's Jon Erlichman explains.

What we are reading … 6th March 2013

iPhone piggy bank predicts how well you'll do in life http://cnet.co/Z4bkJb

Central banks 'cannot resolve crisis without govt action' http://dld.bz/cmZGF

Don't Worry About Goldman, They'll Figure Out This Volcker Rule Thing http://dld.bz/cmZGC

Charities suffer amid mobile payments muddle http://www.thelocal.se/46470#.UTGPIjxOCKS.twitter

Kenya's M-Shwari crosses Ksh1 billion in mobile banking transactions a month http://dld.bz/cm5Td

Over half of corporates have no SEPA idea http://shar.es/jEEoC

HSBC pays $4.2bn for fines and mis-selling in 2012 http://bbc.in/14jskN9

Consumer Appetite for Comprehensive, Mobile PFM Grows http://twb.io/VhPX9o

African mobile money adoption soars - GSMA http://www.finextra.com/News/FullStory.aspx?newsitemid=24596

How much data can police swipe from suspects' phones without a warrant? http://dld.bz/cm5SX

Risk In The Supply Chain A Growing Concern for Banks and Regulators http://twb.io/ZI9yOE

Kenyan banks plan to tap mobile money

Financial institutions in Kenya plan to leverage on mobile money transfer technology to enlist more Kenyans in the formal banking system.

A player in the sector believes this will go a long way in boosting the agency-banking model while at the same time reducing the cost of doing financial transactions.

Equity Bank Chief Executive Officer James Mwangi said that while mobile money transfer has been successful in easing financial access, the next phase is to get money from the un-banked population into the formal economy.

“What we are really pushing for is that Kenyans should not be dis-intermediated. If we don’t converge telecoms money transfer with banking facilities, what we are very busy doing is disabling Kenyans from having financial access,” Mr Mwangi said stressing that Kenyans needed more than money transfer services.

According to Central Bank statistics, the mobile money platform from telecom operators moves in excess of Sh3 billion a day, an indication why financial institutions are eager to take advantage of the system.

Mr Mwangi said interfacing telecom services with those from financial institutions would undoubtedly make Kenya the regional hub for financial services owing to the ease of accessing credit.

“It is important we interface the two so that Kenyans continue to build a banking history as well as a credit history that guarantees them access to financial services,” he said.

Since the introduction of money transfer services in 2007 with Safaricom’s M-PESA, Kenya has become a case study to the world given its success. Since then, all four mobile operators have introduced similar services with 58 percent out of the 20 million mobile users embracing the service.

CBK Governor Prof Njunguna Ndung’u has in the past indicated the plan is to eventually have a financial system that would see agency banking change the brick and mortar banking concept and which will deepen financial services especially in rural areas.

Equity Bank has been at the forefront of bridging the gap by partnering with mobile operators to create a platform that essentially ropes money into the banking system.

Speaking during the signing of a partnership agreement with Essar Telecom’s yuCash service, Mr Mwangi said such partnerships would fast tack the process.

Through the partnership, yuCash customers will be able to transfer funds from their yuCash accounts to their Equity Bank accounts directly from their mobile phones and from their bank accounts to their yuCash accounts.

Designed as what is technically known as a Mapped Account, Mr Mwangi added that yuCash customers will alongside basic money transfer now manage to send and receive cash across the various local mobile network operators.

“Through such partnerships, we have managed to significantly bridge the gap between the banked and un-banked masses as part of our overall goal to boost social-financial inclusion as a poverty alleviation strategy,” he said.

Essar Telecom Country Manager Atul Chaturvedi said the deal would help the operator deliver services that have been informed by the needs of the ordinary Kenyan and powered by innovative technology acquired from global industry leaders such as Obopay.

“yuCash presents a significant step towards delivering universal access to financial services through innovative mobile banking and payments services and working with Equity Bank is a step in the right direction essentially geared at meeting our customer expectations,” Mr Chaturvedi said.

Faulu Kenya launches mobile banking service

Faulu Kenya has launched phone mobile banking where customers can open and operate their bank accounts.

Customers can transfer money within accounts and across mobile networks and do automatic and instant loan applications among other functions.

Chief executive John Mwara said: “We intend to bring on board several agents once Central Bank releases the prudential guidelines on agency banking for microfinance institutions,” he said.

The Central Bank of Kenya has issued guidelines on how commercial banks can appoint agents to provide banking services on behalf of institutions.

Information and Communications minister Samuel Poghisio said that despite remarkable progress in the last three years, access to financial services outside main cities remains limited.

The minister said the key lies in efficiencies that intertwine banking with lifestyles of every Kenyan.

“Besides more coverage by regular banks, alternatives such as microfinance and saccos should be strengthened and encouraged to expand”, he said.

Kenya's Orange launches mobile banking service

Telkom Kenya has launched a mobile money service which allows users to manage accounts held at Kenya's Equity Bank from their mobile phones.

Customers of the new product known as "Orange Money" can request bank loans, make interbank money transfers, withdraw or send cash and pay bills all from their mobiles.

"You now have your bank in your pocket," Equity's Chief Executive James Mwangi said at the launch of the new service. "That is how easy banking is going to become."

Some $30 million changes hands [in Kenya] through mobile transfers daily, Central Bank of Kenya Governor Njuguna Ndung'u said during the launch of Orange Money.

Telkom Kenya, which retails as Orange, and which is controlled by France Telecom's Orange, lags market leader Safaricom, which operates the popular M-PESA transfer service, as well as another operated by the local subsidiary of India's Bharti Airtel.

"The service is mapped onto the customers' bank accounts, making it possible for the customers to literally run their accounts from their mobile handsets, with the accounts' security aligned to that of the bank," a statement from the two companies said.

Money transfer services, especially M-PESA, are hugely popular in Kenya and have transformed the way money moves around. Many Kenyans who did not hold bank accounts can now access basic banking services from their handsets.

Kenya now has 12 million mobile banking account holders, up from 2.6 million at the end of 2007. Deposits stood at a total 1.2 trillion shillings at the end of September from 540 billion in 2007, the governor said.

Equity Bank had 5.7 million customers at the end of September, the most in Kenya, largely driven by its mobile banking product with Safaricom that is known as M-kesho.

Kenya' April remittances up slightly: Central Bank

Kenyan remittances rose slightly to $52.68 million in April from $52.31 million a month earlier, and were up from $48.12 million in the same month last year, the Central Bank of Kenya said this week.

"The pick up in April ... can indirectly be attributed to improving economic conditions in the regions of origin, and improved prospects for economic recovery at home," the bank said in a statement.

The central bank said the main source of the money remained North America followed by Europe.

Typically, Kenyans living abroad send money back home to help their families and to invest in various sectors like real estate.

They sent a total of $609 million last year, down from $611 million in 2008. Remittances rank among the country's top sources of foreign exchange alongside tourism, tea and horticulture.

Kenyan government salute to remittances

The Kenyan government recognizes the contribution by close to 2.5 million Kenyans in the Diaspora towards the country's economic growth through their remittance, Vice President Kalonzo Musyoka has said.

Mr. Musyoka noted that in 2008-2009 financial year Kenyans living and working abroad remitted over $1billion to the country.

He said the government will continue to engage her citizens abroad in various fields as they were only contributors to the country's economic growth but also they are ambassadors who play a crucial role of boosting positive image internationally.

The Vice President made the remarks on Monday when he opened the first conference of Kenya's honorary consuls abroad, at the Windsor Hotel Nairobi.

The conference whose theme is "New Dimensions in Kenya's Diplomacy: the role of the Kenya's consuls is aimed at appraising the officials with the country's foreign policy priorities and their role in actualizing them.

Mr. Musyoka said the adoption of the proposed constitution will open doors for the country to expand its bilateral relations with the rest of the world for the benefit of her people.

He said the new law will allow for dual citizenship, thus creating the right environment for the Diaspora to increase its remittances and investments

On tourism and foreign investments, Mr. Musyoka added, the draft proposes the devolution of funds thus opening up the rural areas for business and development.

The Vice President said the government was in the process of producing a written foreign policy in which core priorities and objectives such as promoting economic development, enhancing regional peace and security with interlinked pillars of diplomacy will be outlined. He however, noted that due to financial and economic limitations, the government has adopted a strategy of expanding Honorary Consular representation abroad to conduct Kenya's diplomatic interests.

The Minister of Foreign Affairs (MFA) Moses Wetangula commended the honorary consuls for offering to represent Kenya abroad, citing Australia where there are many Kenyans studying and working. He assured that the government will support all the efforts by honorary consuls in their tasks as country's representatives.

Mr. Wetangula assured them that they will be introduced to the key players in the Kenya economy and the role they can play in the vision 2030.

The Dean of Honorary Consuls, Mr.Jens Peter Breitengross of Hamburg, Germany urged the ministry to keep them informed of the changes that are taking place in Kenya.

Remittance inflows to Kenya drop because of Euro problems

Remittances from the Kenyan diaspora will maintain a downward trend as the debt crisis spreads among European nations, market analysts have said.

“There has been a significant drop in remittances from the European area in the last few months, we don’t know when the trend will reverse,” said Frida Nzilani of Sky Forex Bureau.

Europe, which accounts for 27 per cent of the total remittances from Kenyans working abroad, is reeling under the weight of huge domestic debts.

“Investment instruments like mortgages are going to be affected due to reduction in incomes and job losses”, said Mr. Karisa Yaa, treasury manager at Kenya Commercial Bank.

An earlier report by the Central Bank had indicated a decline of three per cent, but market analysts warn the trend may dive further even as most Euro zone nations adopt austerity measures to curtail spending hence shrinking growth.

“Economies already in a crisis like Greece, Spain and Britain will see taxes hiked, an issue that will prompt layoffs and salary cuts” said Mr. Chris Muiga, a trader with Kenya Commercial Bank in an interview with the Business Daily.

“The decline of Greece into her current economic woes has sent jitters across the Euro zone creating a lull in what would have been otherwise a resurgent economic growth, ” said Karisa.

Kenya has been experiencing growth in the value of remittances from the diaspora for the last five years owing to the increasing number of skilled Kenyans abroad. They were, however, hit by the last global financial crisis, a resurgent upward trend has again come under pressure from the euro zone debt crisis.

The annual aggregate figures have maintained a steady upward trend from $338 million in 2004 to $609 million in 2009 except between 2008 and 2009 when there was a lag arising from the global financial crisis.

The decrease in remittances from $611 million in 2008 down to $609 million in 2009, a three per cent decline, arose from job losses and the liquidity crisis occasioned by the subprime mortgage crisis that hit Europe and North America.

Industry players attributed the persistent long run increase in cash inflows to the increasing number of Kenyans looking for employment abroad.