Mobile Money: The Economics of M-PESA

Mobile money is a tool that allows individuals to make financial transactions using cell phone technology. In this paper, we report initial results of two rounds of a large survey of households in Kenya, the country that has seen perhaps the most rapid and widespread growth of a mobile money product—known locally as M-PESA—in the developing world. We first summarize the mechanics of M-PESA and review its potential economic impacts. We then document the sequencing of adoption across households according to income and wealth, location, gender, and other socio-economic characteristics, as well as the purposes for which the technology is used, including saving, sending and receiving remittances, and direct purchases of goods and services. In addition, we report findings from a survey of M-PESA agents, who provide cash-in and cash-out services, and highlight the inventory management problems they face.