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3 Reasons Why Mobile Money is So Popular in Kenya

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Mobile money has become increasingly popular around the world, especially in developing nations. The mobile money transaction found its prized business in Kenya. It is more like a digital wallet. But it is different than the google wallet or IPhone pay. It is a more simple financial service. The people who can’t afford an iPhone or any smartphone can avail of this service as their digital wallet. Basic feature phone and a sim card are all it takes to avail of this service. This service is specially designed for the ease of people who don’t have much access to banks or debit cards. The SIM card in the mobile acts as an individual’s account. The account holder has a unique password. By using this phone number and password, users can do all sorts of financial transactions. All the transactions are confirmed by SMS. This system of mobile money initially started in Uganda in 2008. The Vodafone company that operated in Kenya quickly realized the potential of mobile money. The following year Vodafone collaborated with Safaricom and started MPESA in Kenya. MPESA is the pioneer of the mobile money platform in Kenya. MPESA rates were more competitive and affordable compared to banks. This lead to the widespread acceptance of MPESA in Kenya.

We will look at three of the reasons why mobile money became so popular in Kenya.

Not so easy access to conventional banks

The majority of Kenyans didn’t have easy access to the banks. First of all, the doors of banks were not open to people from all walks of life. The poor people couldn’t fulfil the criteria to open a bank account. Moreover, the number of banks was not adequate compared to the population. On average, most of the people didn’t have a bank within ten miles radius of their home. It was difficult for them to store their cash at home. On top of that, there was the risk of robbery and theft. They had to be quite innovative on how to store their cash safely at home. People would sometimes keep money under their mattress or small cupboards which were not safe. They even went to the extent of hiding money under rice bags or the ground. In such a scenario, MPESA came to the scene. They emerged as the common people’s champion. People could, then, safely keep their money in their digital wallets. And importantly, the commission cuts for the transactions were way cheaper compared to the traditional bank. Besides, the ATMs were not available at all places.

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And the high maintenance cost of running an ATM meant more service charge and commission cuts from the account holders. The widespread availability of MPESA agents enabled people to withdraw cash at any time and any moment.

Ease of Use

The next reason why mobile money got so popular was its ease of use and simplicity. It required zero money to open an account. Users didn’t need any reference or a large pile of paper works, like the bank. Neither the internet nor high-end smartphones were necessary. Just the network coverage of the cellphone company was enough to conduct the transactions. The local agents would collect the cash on behalf of the company and transfer the amount into the account holder’s digital wallet. The amount could also be withdrawn as cash anytime from the agent outlets. The agent outlets were everywhere. Even the small grocery shop at walking distance acted as an agent for MPESA and other mobile money companies.

A boom in small business

After the widespread reach of MPESA, Kenya saw a boom in small business and entrepreneurship. People had skills and resources. But an absence of banking facilities for the poor was the main obstacle to growth and business ventures. With the help of mobile money, everyone could make transactions and payments. Sellers could receive payments from other parts of the country within seconds. Previously people without bank facility had to depend on intermediate carriers or brokers to transfer their money. There were losses and infidelity issues with those options. Now they found a convenient and hassle-free way to send money where necessary. Businesses, markets, and shopping outlets all integrated their payment system for acceptance of mobile money. Occupations got diverse. People could work outside traditional farming activities. Women empowerment also gained momentum because of mobile money. Previously, women stayed at home. Now they are coming outside their homes and have started to do business outside. With the help of mobile money platforms, they managed to turn their skills into the full-fledged business.

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Mobile money has transformed the lives of millions of Kenyans. It has enabled the mass to be more active and productive. Mobile money or electronic money is the ultimate smart cash. It has reduced the need for physical infrastructures to extend financial service to the unbanked people. There is a significant contribution of mobile money to the poverty reduction process of the nation. The government and the regulatory bodies also patronized companies like MPESA and helped them to spread in the remotest part of the country.

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