Safaricom in Kenya announced the launch of M-PESA, a mobile payment solution that enables customers to complete simple financial transactions by mobile phone. M-PESA has been developed by Vodafone.

M-PESA is aimed at mobile customers who do not have a bank account, typically because they do not have access to a bank or because they do not have sufficient income to justify a bank account. All they need to do is register at an authorised M-PESA Agent by providing their Safaricom mobile number and their identification card. Once registered, customers can:

• Put money into their account by depositing cash at a local Agent
• Send money to other mobile phone users by SMS instruction, even if they are not Safaricom subscribers.
• Withdraw cash at local a Agent
• Buy Safaricom airtime for themselves or other subscribers

Only Safaricom subscribers can send M-PESA, but anyone who can receive an sms can receive money by MPESA. Cash is paid into M-PESA and withdrawn at M-PESA Agent outlets. These outlets are typically local Safaricom Dealers, but can also be other kinds of retailer such as petrol stations, supermarkets and local shops.

The M-PESA service was originally created as a pilot funded jointly by Vodafone and the UK Department for International Development [DFID] Financial Deepening Challenge Fund. The pilot ran for over 6 months in Kenya from October 2005 in partnership with Faulu Kenya, a local Microfinance Institution.