M-Pesa is a mobile-phone based money transfer service. Currently it’s mainly used in East Africa.

Here a short interview I did with a driver in Kenya about how he uses M-Pesa.

What do you use M-Pesa for?
I can send money to my wife, and I can pay bills.

Can you also use it to pay at stores?
Yes, you can, but I don’t do that. I mainly use it for transferring money.

How does it work?
You need to have an account at Safaricom [the mobile network operator]. And you need to top-up some money on your account. The person which you want to transfer money to also needs to have an account.
When you want to transfer money, you send a SMS to Safaricom  with the phone number of the receiver and the amount you want to transfer. Then you enter your password.

How much does M-Pesa cost?
One money transfer costs 30 Kenyan Shilling [about $0.30] and money-withdrawal costs about 1% of the amount you want to withdraw.

How did you pay your electricity-bill before you had M-Pesa?
I had to go to the office of the electricity-company and wait in line to pay the bill with cash.

Conclusion

Even though the costs for transferring money are not low ($0.30 is a lot for a Kenyan since GDP per capita is about $1000), M-Pesa is a success, since it makes transferring money so much easier.
To me it was striking how easy it is to transfer money with this system. When you compare it to e-banking in Switzerland, which is a chore.

More information

Listen to another interview with a driver in this Video.