11 June 2011 | We have reported earlier how Brazilian airline TAM is reaching the rapidly growing middle class in Brazil in innovative ways. The airline sells tickets via low-end retail chain Casas Bahia and at bus stations, lets customers pay in multiple installments, and provides ‘how to fly’ advice to first-time flyers. Meanwhile in East Africa, airlines such as Kenya Airways and Uganda Airlines have teamed up with mobile payment services M-PESA and Airtel Money to allow people without a bank account to purchase air tickets.
M-PESA (M for money, pesa is Swahili for money) can be regarded as the African equivalent of the credit card and was first launched in 2007 by Kenyan mobile phone operator Safaricom, an affiliate of Vodafone. M-PESA allows Kenyans to transfer money via SMS instead of via a bank account, an important aspect in a country like Kenya where an estimated 30 percent of people (the so-called ‘unbanked’) have no access to formal or even informal financial services.
With M-PESA, the user can buy electronic money at one of 24,000 M-PESA agents around the country and send this ‘e-cash’ to any other mobile phone user in Kenya, who can then redeem it for conventional cash at a snearby agent. M-PESA customers can do transactions of up to Ksh 140,000 (USD 1600, EUR 1100) per day and a maximum of KShs70,000 can be deposited, sent or withdrawn per transaction. A variable fee for transaction applies (example Ksh 150 for transactions between Ksh 20,000 and 35,000).
Originally launched as a money transfer service for relatives abroad to send money home, M-PESA is also often used to pay directly for goods and services, from groceries at selected supermarket chains to electricity bills and taxi-cab fares. An M-PESA enabled mobile phone can also function as an electronic wallet that lets users pay directly for goods and services at one of 600 participating organizations. M-PESA does not pay interest on deposits nor make loans and users only need to sign up for the service with an ID card.
As of March 2011, the M-PESA service had nearly 14 million customers, or over 80 per cent of Safaricom’s customer base. M-Pesa has also been launched in South Africa and Tanzania by Vodacom, another Vodafone subsidiary.
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