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The Role of M-PESA in Remittance

02 Apr

International migration has become a strategy for individuals and families in developing countries to cope with poverty and economic crisis. Migrants attempt not only to improve their own livelihoods but they also send a considerable share of their earnings to their families back home.

As a result remittances provide a significant portion of income in financially excluded socities in Kenya were  financial services are underdeveloped and limited to urban populations, making migrant income an important source of capital investment.

One of the most successful ways of remitting money to Kenya thus far has mobile money transfers. I have written a bit about the role that M_PESA has played in mobile money transfers. I would however like to give a more detailed explanation as to how exactly this service works.

The M-Pesa service platform, developed in-house by Vodafone and the consulting company Sagentia, integrates a mobile wallet with Safaricom’s rating, billing and provisioning systems.

Subscribers of Safaricom can register for the M-Pesa service by filling up a simple form and providing any identification proof. Once registered, Safaricom replaces their SIM with the M-Pesa enabled SIM (if required, all new mobile subscribers now get the M-Pesa enabled SIM).

To load the money on the the wallet, once you make payment  to a remittance company form abroad, they will usually make payment to  an agent in Kenya who will then  transfer an e-Float the recipient  via encrypted SMS. The receiver of the virtual currency can either use it for further transactions or can cash-out from M-Pesa designated outlets.

 

 
 

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