Safaricom launched M-PESA in Kenya in March 2007, and it has grown to become the most successful implementation of mobile financial service in the developing world.
M-PESA is an SMS-based moeny transfer system that allows individuals to deposit, send, withdraw funds, pay bills and shop for goods rght from their mobile phones.
To access the service one must be first register at an authorised M-PESA agent. They are then given a personal electronic account that is linked to their phone number and accessible through a SIM-based card-resident application on the cell phone.
Registered M-PESA users can deposit and withdraw caash to and from their accounts by exchanging cash for electronic value at a network of agents.
M-PESA registration and deposits are free. Users then pay a flat fee of kes 30 for person-to-person transfers and kes 25 for withdrawals, and kes 1 for balance enquiries.
M-PESA accounts are maintained in a server that is owned and managed by Vodafone but Safaricom deposits the full value of its customers' balances on the system in pooled accounts in regulated commercial banks.
SAfaricom allocates and manages the M-PESA accounts but the e-value in the accounts is fully backed by very liquid deposits at commercial banks.
M-PESA users are not paid interest on the balances in their accounts.