Dylan Higgins, Jake Kendall, and Ben Lyon
Mobile Money Usage Patterns of
Kenyan Small and Medium Enterprises
Some people expect to see small and medium enterprises (SMEs) benefit substan-
tially from using mobile money (MM). SMEs are often seen to process large num-
bers of payments and can have a surprising amount of money flowing through
a ellos. Al mismo tiempo, their need for payment and transactional services are not
always well served by traditional banks. They do not always find it easy or cost
effective to adopt a full-featured package of banking services as a larger business
might. Anecdotal evidence seems to confirm that many small businesses use MM
intensively in markets where it is available; sin embargo, the phenomenon is not well
documented or researched. En respuesta, in late 2011, we conducted a survey of 865
SMEs in Kenya to better understand MM adoption patterns in one of the most
active markets in the world.
We found that whether Kenyan SME owners use MM to pay utility bills or
salaries or suppliers, they are driving higher volumes of both MM adoption and
transactions. Our data show that of the 865 SME owners who responded, 861
(99.5%) used MM in their personal or business dealings, y 67% used it for busi-
ness. SMEs are intensive users compared to consumers; 80% report using MM
once per week or more, whereas the average usage in Kenya is closer to twice a
mes. SMEs also appear to promote viral adoption along the supply chain; muchos
say they adopted it because clients or suppliers asked them to. For these reasons
SMEs should be a critical market segment for mobile network operators who seek
to make MM usage pervasive across the value chain from consumers, to mer-
chants, to suppliers.
We also found that while MM use by SMS is widespread, it is not yet deep and
SMEs are not yet “closing the e-loop.” Most SMEs use MM on a one-off basis and
do not actively promote MM at the point of sale. En particular, SMEs are not yet
Dylan Higgins is the CEO and Cofounder of Kopo Kopo, a merchant aggregator for
mobile money systems.
Jake Kendall is the Program Officer managing the research strategy in the Financial
Services for the Poor initiative at the Bill & Fundación Melinda Gates.
Ben Lyon is the Head of Product and Cofounder of Kopo Kopo.
© 2012 Dylan Higgins, Jake Kendall, and Ben Lyon
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closing the e-loop by receiving large volumes of retail transactions electronically
and then paying out to employees in electronic value – both retail transactions and
wage payments were predominantly cash. We did find that 28% reported accept-
ing MM retail payments, a figure we found higher than expected given the high
pricing of transactions and lack of a convenient interface. Enticing SMEs and other
businesses to close the loop will be a major part of the endgame for MM operators
who hope to move toward a cash-light world.1
Finalmente, our survey found several barriers that have prevented people from
using MM. Específicamente, respondents cited high tariffs and inadequate access to
record-keeping and payment-management interfaces as main barriers to adoption.
In order to make MM ubiquitous, MM providers and their partners will need to
keep an eye on cost and convenience and offer value-added services beyond the
transaction.
CONTEXT
Three recent studies document how MSMEs (micro, pequeño, and medium enterpris-
es) are using MM, but the data sets are limited.2 In general, this work shows that
MSMEs are using MM more intensively than regular consumers, but it also shows
that MSMEs are not “going digital” and using MM extensively for a large percent-
age of their business transactions.
One study of users of MTN MM in and around Kampala, Uganda, was con-
ducted in 2009 by Ali Ndiwalana, Olga Morawczynski, and Oliver Popov.3 They did
not set out to investigate business users, but when they asked their survey respon-
dents what they were using MM for, aside from airtime purchases, they found that
cerca de 33% of transactions were to purchase or sell goods or services, while the
remaining two thirds were for money transfers. Larger formal businesses in
Uganda do not usually accept MTN MM as a means of payment, so it’s likely that
most of these purchases and sales transactions were conducted by entrepreneurial
individuals or small businesses on one side or the other. This is a significant level
of usage, given that MM has never been marketed for retail or business payments.
It speaks to the high level of need in this group.
In another study, Lennart Bångens and Björn Söderberg4 interviewed 110
MSEs in Tanzania about their use of MM. (These were just micro and small enter-
tomado, not medium-sized ones). They found that, in Tanzania, business owners use
MM much more than the national average, and that many report significant ben-
beneficios. The main benefit these entrepreneurs reported was increased efficiency,
because of time saved and improved logistics. Most find MM much easier than
banks: the locations are more accessible, customer service is better, transactions
are quicker, and it’s much easier to sign up for an account. dicho eso, agents often
didn’t have the float to meet the larger transaction sizes that SMEs require and
some reported having to visit two or three agents to get the cash or float they need-
ed. The authors also believe that SMEs may help “diffuse” MM by prompting cus-
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Mobile Money Usage Patterns of Kenyan SMEs
tomers and suppliers to sign up—yet another reason they may be of high value to
mobile network operators as early adopters. Our data also support this claim.
In a more recent study, Ignacio Mas and Amolo N’gweno5 investigated how
businesses in Kenya use the M-PESA product, focusing on medium and large busi-
nesses rather than on micro and small businesses. They found that formal busi-
nesses were very slow to adopt MM. In discussions, such businesses identified
multiple barriers to integrating MM more fully into their payment systems. Ellos
say MM is hard to integrate into corporate IT systems, and it is impossible to move
money quickly between bank accounts and M-PESA accounts; they also see chal-
lenges with adapting legacy paper-based processes to a new system. También, the sys-
tem offers no options for paper receipts or transaction confirmation, and has no
way to handle misidentified transactions. Y, without any arbitration process,
they fear fraud and transaction reversals. The product’s existing features are limit-
ed: web interfaces are inflexible, application program interfaces (APIs) are inade-
quate, and they experience too much system downtime. Finalmente, Safaricom does
not target its sales, marketing, and services to this segment.
Given all these barriers, most formal businesses rely on checks, bank transfers,
and cash to make payments. The authors do note that many small and informal
businesses—like those our survey focuses on—do not have ready access to these
opciones, so they use MM more frequently out of necessity.
This is the point of departure for our survey; we seek to understand how this
segment uses MM and to diagnose the barriers to greater use and integration.
OUR SURVEY: SAMPLE SIZE, DATA, SECTORS, CONNECTIVITY
Our goal in this study was to collect data to answer three questions: Do SMEs
leverage MM for business purposes, and if so, cómo? What challenges do they face
al hacerlo? And how can commercial providers better serve this important mar-
ket segment?
Our survey team approached 1,000 SMEs throughout Kenya: 600 in Nairobi,
200 in Mombasa, 100 in Nakuru, y 100 in Kisumu. SMEs were selected at ran-
dom from Mocality.com, a database of over 160,000 Kenyan SMEs. By necessity,
our sample focused on urban and semi-urban businesses that had registered with
Mocality. Thus our sample is biased toward larger, formal businesses and away
from the large pool of informal single-person businesses that dominate the land-
scape in much of Africa. Sin embargo, 50 percent of our sample was small busi-
nesses engaged in various lines of work (p.ej., airtime vendor, salon, restaurant,
etc.); 13.6 percent of them, o 127 respondents, were one-person businesses. El
remaining 50 percent were medium-sized businesses. We received quality respons-
es from 932 negocios.
El 932 Kenyan SMEs in our sample had a total of 13,000 employees. El
average number of employees per business across all cities was 14.3, with a medi-
an of 5; 13.6 percent were sole proprietorships. The mean was significantly higher
than the median because several businesses employed over 100 gente. Though
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Cifra 1. Do you have regular access to the Internet?
small by definition (bajo 50 percent had five employees or fewer), the SMEs in
our sample were likely larger on average than a fully representative national sam-
por ejemplo, given that we did not sample in rural areas and may have missed many infor-
mal, one-person businesses since we used the Mocality database.
The SMEs in our sample were highly connected. Of the SMEs that responded,
94.1 percent own a mobile phone, compared to the national average of 74 percent.6
Como figura 1 muestra, Internet connectivity was also high; 60.6 percent of respondents
have regular Internet access via either a mobile phone or a PC. The fact that the
SMEs in the sample were highly connected highlights the opportunity to reach
them with properly-designed mobile and Internet-enabled services.
The SMEs in our sample did a significant volume of business daily, a total of
about Kenya Shillings (KSE) 49METRO (US$515,000). Though most of them have only a few employees—or only one—their average daily revenue was KSE 56,825 ($600)
with a median of KSE 10,000 ($105). Del 617 respondents who were willing to supply revenue information, the sum of revenues was KSE 36.7M ($390,000) por
día. This high turnover indicates many payments and much cash moving in and
out of businesses.
Services and retail were by far the dominant business activities. Of these busi-
nesses, 50% classified themselves as services, 33% as retail or trading, 12% as man-
ufacture, y 5% as other. Thus this sample is biased more toward services and
retail than the Kenyan economy as a whole; encima 20% of the Kenyan GDP comes
from industry or manufacturing. This is to be expected for a sample of SMEs, como
manufacturing firms tend to be larger. These are businesses with large unmet
needs for payment services, especially in the retail sector.
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Mobile Money Usage Patterns of Kenyan SMEs
Cifra 2. Do you use any of the following MM services?
How Has Mobile Money Spread to Small and Medium Enterprises?
In our sample of SMEs, rates of MM adoption are extremely high. All but one of the
865 SMEs that responded to the question on MM usage had used MM; four had
used it but stopped. De este modo 99% of those who responded had at least one active MM
cuenta. Además, 67% of respondents reported using MM for business pur-
poses while the others reported personal uses. Of the users, 72% had one account
y 28% had more than one. Cifra 2 shows which services they reported using.7
While Safaricom is clearly the leader in total numbers, it also seems to have a lower
churn rate, as evidenced by the smaller proportion of users who are former users.
Many businesses used MM quite intensively. A total of 80.3% of respondents
claimed to use MM at least once a week; 25.1% use it every day, 43.8% use it a few
times a week, y 11.4% use it once a week. Data from Safaricom in 2010 presentado
that the average M-PESA user was making two transactions a month;8 this indi-
cates that SMEs are quite intensive users of the MM service compared to the rest
of the population. dicho eso, many were still making many of their payments in
cash, as Table 1 muestra. This indicates that MM still has some way to go to displace
cash significantly within Kenyan SMEs.
MM usage by SMEs may promote viral adoption. Most respondents said they
use MM either because customers ask to pay with it (47.8%), or because sales
agents or suppliers ask to be paid with it (38.6%)—and many (13.7%) indicated
that requests from both customers and suppliers were a factor. Most of those who
responded “other” indicated that convenience and safety were their paramount
reasons for choosing MM over other methods. The fact that customers value the
ability to pay with MM and that SMEs’ business partners prompt each other to take
up the service shows it spreads virally up and down the supply chain. This indi-
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Cifra 3. Which (if any) do you use for business?
cates that MM operators may wish to target SMEs to encourage the viral adoption
ciclo.
SMEs are more frequent adopters and more intensive users than other cus-
tomers and they appear to promote viral adoption to their customers and along the
supply chains. De este modo, SMEs would appear to be a very important segment for MM
schemes to target.
How Do Small and Medium Enterprises Currently Use Mobile Money?
The idea that MSMEs use MM should come as no surprise, since they have a lot to
gain from it’s use. As our data shows, they need to pay and be paid frequently,
sometimes in quite large amounts or over long distances. This implies that they
could lower their costs and save time with a cheaper and more convenient way to
pay electronically. They also need to manage their working capital to get the most
from it, which means turning it over as often as possible: speeding up the cycle
from cash to inventory to receivables and back to cash, but replacing cash with
electronic value. SMEs also find it useful to have a record of transactions, as they
often do not keep formal records but do deal with many customers and suppliers.
Thus they often hold many ledgers, receipts, and debts in their head.
MM is gaining ground against cash for many types of payments
While cash is still king for all types of receipts and payments, MM has made sig-
nificant progress, especially in the areas of paying suppliers and paying bills: two
areas where more sophisticated counterparties may ask or even require MM pay-
mentos, as compared to employees and customers. Differences in the level of adop-
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Mobile Money Usage Patterns of Kenyan SMEs
Cifra 4. How do Customers pay?
tion for bill-paying between Mombasa and Nairobi illustrate this trend.
Respondents in Mombasa use MM the least (24.22%) and those in Nairobi use it
the most (34.15%). The fact that SME owners in Mombasa use MM to pay suppli-
ers suggests that bill providers there may have less access to corporate MM
accounts than their counterparts in Nairobi where penetration in the corporate
sector is greater.
Cash, MM, and bank transfers are the most common ways businesses pay bills,
en 38.21%, 30.8%, y 26.95% respectivamente, as shown in Table 1.
Respondents across all cities prefer to use cash and MM to pay suppliers, con
bank transfers accounting for only 18.34% of responses. En cambio, it appears that
cash and bank transfers remain the most popular methods for paying employees,
con solo 11.39% of respondents using MM. Paying rent is the one area where cash
does not dominate all other forms of payment; aquí, bank transfers are the most
common way to pay, across all four cities.9
Given the potential benefits of converting their various payment streams to
electronic forms of payment, it is no surprise that SMEs are converting to MM,
despite the lack of convenient interfaces, ways to track transactions and manage
records, and limited pricing options. Being able to receive MM payment from
clients more quickly allows them to more quickly convert receivables to cash; sim-
ilarly, being able to arrange delivery and pay over the phone increases efficiency on
the other end by moving cash into inventory more quickly and making arrange-
ments at lower cost. Al mismo tiempo, because business owners can more quickly
order more supplies, they can reduce the inventory they hold and not wait to run
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Cifra 5. What is the main benefit of receiving mobile payments?
out before ordering more, which also speeds turnover. In this sense they are mov-
ing toward the just-in time style of production practiced by many larger firms.
Mobile Money penetration for retail payments is surprisingly high
Como se esperaba, cash remains king at the point of sale: 62.14% of respondents across
all cities said their customers use cash. Sin embargo, 28% of respondents across all
cities claim that customers pay them with MM. While these respondents receive
payments in other forms, it is striking that so many report receiving some pay-
ments via mobile, especially given the lack of a convenient interface for retail pay-
ments and pricing geared toward money transfer.
Mobile Money is safer and helps with record keeping and tracking
When asked about the benefits of accepting MM, respondents across all cities said
safety was the paramount benefit, followed by better accountability, as the SMS
receipt leaves a paper trail. This paper trail helps reduce leakage and error, si
by employees or customers, and makes business owners more confident that their
books are accurate. This point is especially salient for businesses that sell services,
which cannot be easily accounted for in the same way that payments can be
tracked against inventory for retail and manufacturing businesses.
Barriers to Adoption
MM is becoming a prominent method of transaction for business purposes. Still,
it is clear that several impediments, especially tariffs and the user interface, prevent
MM from becoming even more prominent.
As Figure 6 muestra, tariffs are the biggest impediment to more businesses
adopting MM. The high cost of person-to-person transfers and the lack of differ-
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Mobile Money Usage Patterns of Kenyan SMEs
Cifra 6. What would make it easier to accept mobile payments?
entiated pricing for different types of bulk users or for different types of transac-
ciones (p.ej., in-store retail payments) is a significant barrier to market growth. El
customer and/or business pays a variable tariff, depending on the kind of transac-
ción: p.ej., Send Money, Buy Goods, or Pay Bill. If a business sells inexpensive
goods, the relative tariff is either prohibitively high to the customer, the margin less
the tariff is prohibitively high to the business, or both. De este modo, the existing tariff
structure is not compatible with most common transactions–the small, frecuente
payments for daily servings of fast-moving consumer goods.
A second barrier is the lack of a user-friendly interface to facilitate business
uses and record-keeping. While M-PESA has a limited interface where users can
check their transaction history, it is very basic and lacks the kind of record man-
agement and other functionality that would make it easy for businesses to use it.
So, while many MSMEs do report relying on their SMS history from M-PESA as a
crude form of electronic record-keeping, the lack of functionality here is a clear
barrier.
These two barriers were echoed in two recent studies on new financial prod-
ucts that leverage the MM platform in Kenya. Both found that pricing and poorly
performing APIs are significant barriers to developing products that leverage
MM.10
Solo 17 respondents (1.94 por ciento) said they do not accept MM because no
agent is nearby. This is not to say that agent service is not a major concern of SMEs;
instead it shows how successfully Safaricom has blanketed the Kenyan landscape,
with over 30,000 agents. Other services, in Kenya and abroad that have significant-
ly fewer agents have experienced significant churn among SMEs (ver figura 2).11
We asked the respondents who do not accept MM or who discourage their cus-
tomers from paying with it for their reasons. Across all cities, 38.47 percent of
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Mini-case: Dennis, furniture business
Dennis is 35 years old. He is one of the five partners who operate Sakaki
Enterprise, located at the Githurai 45 roundabout. Githurai is a mixture of slums
and suburbs in the eastern part of Nairobi. Sakaki makes and sells furniture—
sofa sets, tables, chairs, etc.—at prices that range from KES 3,000 to KES 30,000
($34.76 a $347.60). Dennis says their business operates with mostly cash. Ellos
use no accounting software, and they keep their records in paper notebooks.
Sakaki relies heavily on M-PESA for most of its transactions. It buys raw
materials every week from the Gikomba market, using M-PESA. “We usually
pay the supplier with M-PESA in advance so that he can deliver the raw materi-
als to us once or twice every week,” says Dennis. Dennis pays the suppliers
between KES 10,000 and KES 20,000 ($116 y $232) every week using M-
PESA. Sakaki also pays its employees with M-PESA. This is very convenient for
Sakaki; it saves them time.
Many of Dennis’s customers ask to pay with M-PESA, especially those who
buy furniture worth KES 20,000 or more. Dennis says that Githurai is a very
insecure area and that paying with M-PESA is the best option for his customers
and for Sakaki too.
Dennis says that the greatest challenge he and his partners face is lack of cap-
ital to expand and grow their business.
Thanks to Peter Gakure-Mwangi
respondents said, “I prefer cash,” and 28.54 percent said the tariffs are too high.
The responses above were corroborated by those to our Question 11—“What
would make it easier for you to accept MM?”—to which 44.21 porcentaje de respuesta-
dents chose lower tariffs. It is worth noting that 22.26 percent of respondents said
they would like an electronic record of MM transactions. If respondents use indi-
vidual MM accounts to accept business payments, this response makes sense as
few MM systems enable users to access a transaction statement.
How can mobile money schemes and service providers best reach small and
medium enterprises?
Our analysis and discussions with SME owners have uncovered a few possible
ways that commercial players could target SMEs as an MM user group. To drive
adoption, MM players need to understand the unique needs of SMEs that tend to
be intensive users, in terms of both volume and number of counterparties.
To manage their relationships and higher volume, SMEs need good tools for
records management and tracking. Paper record-keeping remains the status quo
for many SMEs in Kenya. The electronic record associated with an MM transac-
tion presents a unique opportunity to incentivize SMEs to adopt electronic record-
keeping for the first time. Específicamente, electronic records allow SMEs to reduce the
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Mobile Money Usage Patterns of Kenyan SMEs
Cifra 7. Why do you NOT accept mobile payments?
“cost of cash”: seguridad, counterfeit and leakage risks, transport, customer
anonymity, etc..
Because SMEs have varied needs, mobile operators can avoid the cost of pro-
viding these record-keeping tools by offering data interfaces such as application
programming interfaces, which can be leveraged by the software community. El
challenge will lie in finding the market-appropriate tools and processes that nudge
an SME to adopt an electronic method to replace existing mental or paper records.
Our findings indicate that a significant step driving adoption would be to improve
both the content of the transaction record, by including the source and purpose of
payments, and to improve access to the record in the form of an online or SMS-
based interface.
In addition to better record-keeping, SMEs need a set of features that motivate
them to adopt MM. These features include the ability to manage the reversal of
transactions and to accept retail payments with fees that are at or below credit card
tarifas, and flexible and speedy bank settlement options.
Perhaps more than anything, SMEs need to be offered a platform to change
their consumers’ perspective on MM. Customers are still forced to inquire whether
an SME accepts MM payments. To reach scale, they must be able to assume that
every merchant does so—just as many merchants now assume that every individ-
ual has an MM account.
When the two-sided payment market is in place, Kenya will be well on its way
to becoming a cash-light society. Consumers will not be forced to convert MM
value into cash in order to transact with businesses. Similarmente, businesses will be
able to use their electronic value to pay their suppliers and avoid the need to deliv-
er cash payments in person. Along the way, these different payments will be bet-
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Dylan Higgins, Jake Kendall, and Ben Lyon
ter managed and tracked by all of the parties in the payment value chain because
of the electronic records associated with these transactions.
Fast forward. Imagine a Kenya where MM has fully saturated the SME value
cadena: merchants use it to pay suppliers, suppliers use it to pay employees, employ-
ees use it to pay merchants, etcétera. That is the “endgame” for MM providers: a
system whereby MM is issued, cycled, and retained within a closed loop. The same
ubiquity that made M-PESA the preferred way to send money home would then
become the impetus for using MM on a daily basis for (mostly) frecuente, pequeño
transactions. Operators would benefit from a virtuous circle resulting in higher
average revenue per user, consumers would benefit from increased security and
convenience, and merchants would benefit from increased business intelligence
and accountability.
To achieve the endgame, our results indicate that operators will need to keep a
close eye on cost and convenience and should focus on developing tools in-house
and through partnerships that offer market-appropriate solutions to SMEs.
CONCLUSIONS
SMEs are a valuable market segment for mobile operators and their service
providers but they have special needs.
Primero, SMEs may be especially valuable as nodes in driving the viral uptake of the
MM product or product features. As we noted above, they tend to adopt MM
because their customers and/or suppliers do. And because they are just as often
customers and suppliers of other small or large firms, they are likely to be strong
propagators of the product along the value chain.
Similarmente, because SMEs are often in the retail business, they also represent an
opportunity to begin to drive customers to adopt MM for retail payments; for that
to happen, it will have to become a ubiquitous form of payment that is both con-
venient and affordable.
Businesses want to use MM, and many do. Pero, many more would do so if the
tariffs were lower and if the service quality and product features associated with
M-PESA fit the special needs of SMEs. Mas and N’gweno12 list seven ways the M-
PESA platform could be improved to serve business better: features to assure ver-
ification of the sender/receiver, easier process for reversing payments sent to the
wrong number, a paper receipt option, secure APIs to allow business integration,
easy sweeping of funds to/from bank accounts, an integrated interface for paying
and receiving and records management, and efficient dispute resolution.
Most of these features would be useful for MSMEs too. Además, MSMEs
have special needs that should be taken into account. En particular, an MM offer-
ing for merchants should incorporate ways to access these features through limit-
ed interfaces like web and smartphone, rather than integrating them into back-end
IT systems that few MSMEs have.
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Mobile Money Usage Patterns of Kenyan SMEs
Given that a majority of the Kenyan economy operates informally, at low mar-
gins, for small value purchases, the tariffs alone are a significant impediment to
more MSMEs adopting MM. In order to take MM to the next step—retail and
value chain payments—it is imperative that tariffs be reduced.
Businesses also want marketing materials in order to educate customers that
they can pay with MM—in the same way that VISA, MasterCard, and Amex pro-
vide stores with logos and other signage to show which merchants accept their
cards. Mobile operators are particularly adept at marketing and should launch
campaigns to encourage people and organizations to pay with MM.
At the heart of any successful business lies a strong record-keeping system.
Mobile operators should recognize that they can help businesses grow through bet-
ter communication and better payments, and also by enabling them to improve
their accounting. Many MSMEs could benefit from even rudimentary Internet- o
smartphone-based record-keeping and customer relationship management sys-
tems to manage payments and cash flow. Such functionality could induce them to
take up mobile payments.
Smart regulations are required to protect existing players and allow new ones
to flourish.
Regulators have enabled innovation to flourish in Kenya. Ahora, many of the pay-
ment innovators are well established and it is time to level the playing field.
Regulators should facilitate healthy competition between MM providers and
encourage new market entrants by reducing barriers to entry. They should be espe-
cially careful to ensure that MM players do not abuse their control of the commu-
nications channels (voice, SMS, or USSD) that facilitate mobile financial transac-
tions and thus disadvantage other entrants, like banks, that could also offer finan-
cial products and services over the network.
Además, regulators and policymakers should take a market-level view of
encouraging the transition to electronic “cash light” by engaging with operators
and other players around issues of pricing, service quality, and the platform func-
tionality to enable the widest range of uses, and thereby greater innovation.
New and unique business models will need to be tested to serve the Kenyan
market. These models will be tested by banks, mobile operators, and third parties,
and no party should be given an unfair advantage over the others.
Empowering SMEs empowers the economy: SMEs are major drivers of
employment and economic activity.
M-PESA revolutionized the Kenyan market and inspired a global industry. Tiene
slashed the transport and opportunity costs associated with domestic remittances,
lowered the cost of distributing airtime, and helped millions access basic financial
tools for the first time.
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Dylan Higgins, Jake Kendall, and Ben Lyon
Mini-case: Juma, shopkeeper
Juma is 34 and operates a mini shop (duka) at Dandora Phase 2 estate. Dandora
is a populous low-income estate in the Eastlands area of Nairobi. He runs the
shop with his wife and they have two small children.
Juma serves an average of 30 customers each day; most are neighbors. Él
sells mostly foodstuffs like milk and bread, and detergent in small packets. Su
most common transaction size is KES 200 ($2.30).
Juma says that very few of his customers ask to pay him with M-PESA. “My
customers always pay me with cash. They mostly buy small quantities of things
like sugar, soap, and bread, so there is no point in them paying with M-PESA.”
But Juma says that some customers pay with M-PESA. “The customers who
pay me with M-PESA are only the ones that I know and trust. Some take goods
on credit and they pay with M-PESA at the end of the month.” However, Juma
says that he cannot turn away a customer who has only M-PESA and has no cash
at hand. He says he would accept M-PESA plus an additional withdrawal
amount. “But in a case where I don’t know the customer, I have to withdraw the
money immediately, or just hope that the customer will not reverse the transac-
tion.”
He explains, “I pay my supplier with M-PESA in advance so he can deliver
the goods to my shop. That way I don’t have to leave my business to go and buy
cosas. It saves me a lot of time.” Juma says for other products like milk and
bread, he has an arrangement in which the supplier delivers the goods but he
only pays for them at the end of the day, after selling them. He uses M-PESA to
make the payment. “Initially the suppliers used to come to my shop to collect the
money but nowadays I just ‘M-PESA them.’”
When I ask Juma what one thing he needs most to expand his business, él
tells me it is capital. “I would love to expand my business but I do not have the
capital to do that.”
Thanks to Peter Gakure-Mwangi
As our survey found, most businesses and consumers want to use MM more
regularly. They find it to be safer, más eficiente, and convenient than other pay-
ment channels.
Most mobile operators define an “active user” as someone who uses MM sev-
eral times a month. By facilitating the broader payment ecosystem, from utility and
value chain payments to payments at the point of sale, MM providers could enable
customers to use MM several times a day. This would give customers the potential
to benefit from lower transport and opportunity costs, as well as increased securi-
ty.
Moving informal cash-based transactions to an electronic medium will also
benefit financial institutions and governments. Consumer transactions can be fed
into credit reference bureaus, enabling banks to properly assess the credit worthi-
80
innovaciones / Entrepreneurial Ecosystems
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Mobile Money Usage Patterns of Kenyan SMEs
ness of customers and adjust interest rates accordingly. Governmental bodies
would be able to pay workers and welfare recipients more efficiently and at lower
costo.
Cash is the enemy of financial inclusion. By fostering the widespread use and
acceptance of MM, financial services will continue to become more accessible and
affordable for consumers at the base of the pyramid.
1. See David Porteous and Ignacio Mas, “A LiFi World,” CGAP Technology Blog, Enero 11, 2012.
Available at http://technology.cgap.org/2012/01/11/a-lifi-world/.
2. Jake Kendall summarized two of these pieces in “Small Business Might Be Big Business for
Mobile Money,” Next Billion blog, Marzo 23, 2011. Available at http://www.nextbillion.net/blog-
post.aspx?blogid=2216.
3. Adi Ndiwalana, Olga Morawczynski, and Oliver Popov, “Mobile Money Use in Uganda: A
http://scholar.mak.ac.ug/andiwalana/files/m4d-
Disponible
Study.”
en
Preliminary
mobilemoney.pdf.
4. Lennart Bångens and Björn Söderberg, “Mobile Money Transfers and Usage among Micro and
Small Businesses in Tanzania.” Available at
http://www.southcliff.se/docs/SME_AND_MMT_FINAL_DRAFT.pdf.
5. Ignacio Mas and Amolo N’gweno, “Why Doesn’t Every Kenya Business Have a Mobile Money
Account? A Study of the Business Uses of Mobile Money in Kenya,” paper presented at 8th
Research Colloquium, hosted by FSDK, Nairobi, Abril
en
http://www.fsdkenya.org/pdf_documents/12-04-20_Business_uses_of_M-PESA.pdf.
2012. Disponible
6. Pew Research Center, Global Digital Communication: Texting, Social Networking Popular
Worldwide. Available at http://www.pewglobal.org/2011/12/20/global-digital-communication-
texting-social-networking-popular-worldwide/.
7. Non-users may have been less likely to respond to a question about whether or not they use MM;
this would imply an actual rate of usage among SMEs somewhat lower than 99 percent but it
would still be quite high.
8. Ignacio Mas and Dan Radcliffe, “Mobile Payments Go Viral: M-Pesa in Kenya.” Available at
http://www.microfinancegateway.org/gm/document-1.9.43376/Mobile%20Payments%20Go%20
Viral_M-PESA%20in%20Kenya.pdf.
On rent, Nakuru is a significant outlier: 22.47 percent of respondents chose “other” and wrote in
“cheques” when asked to explain.
9. See Jake Kendall, Bill Maurer, Phillip Machoka, and Clara Veniard, “An Emerging Platform: De
Money Transfer System to Mobile Money Ecosystem,” Innovations 6, No. 4 (2011): 49-64; Mukesh
Sadana, George Mugweru, Joyce Murithi, David Cracknell, and Graham A. norte. Wright, “Analysis
de
en
http://www.microsave.org/research_paper/analysis-of-financial-institutions-riding-the-m-pesa-
rails.
the M-PESA
Instituciones
Financial
Disponible
Riding
Rails.”
10. Por ejemplo, Bångens and Söderberg document the frustrations many Tanzanian SMEs face in
getting quality service from agents.
11. Mas and N’gweno, “Why Doesn’t Every Kenya Business.”
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