When M-PESA was launched in Kenya during March 2007, we did not know what impact it would have on our lives and the world. For me, I had just graduated from high school, waiting to join college. This was a good time to experiment with anything new and promising.

I heard about M-PESA, but I did not care much because I did not need it. I neither had a phone, nor an ID card, or a passport that was needed to register, nor money to send. Nevertheless, I had a SIM card which I could use whenever I borrowed someone’s phone and texted a few friends.

One day I was sent to go to a post office ten kilometers away from where we lived. I was tasked with sending money to my sister in college. This involved using the post office which had a one day delivery period with their electronic money transfer. The costs were extremely high, and the process of collecting the money would be hindered by working hours, lack of fundsat the post office, or absent staff. You needed to collect the money from the exact post office that it was sent to. The service was terrible, but it was the best that was available then.

Using M-Pesa for the first time

That was the day when I walked into an M-PESA kiosk and out of curiosity, asked to be registered for the service. I spent the next few days dreaming about just what M-PESA could become. Here was an opportunity to send money to a person wherever they were, and have them withdraw it whenever they wanted.

We embraced the invention in Kenya, and M-PESA was only used to send money. When one went to an agent asking to send KES 1,000, they would ask you to give them KES 1,034 which included the sending fees, the fees for withdrawing the money, and the amount to be sent. This is how we needed M-PESA to work, and that was exactly how we needed it.

12 years later, mobile money moves half of Kenya’s GDP, with Safaricom’s M-PESA accounting for the bulk of those transactions. M-PESA has grown from a money transfer platform to a pseudo-banking service which supports e-commerce, money lending, bulk transactions, and savings.

Kenya has received accolades from across the globe for this invention, which has spread to the rest of the world with mixed results. The M-PESA narrative helped to build the notion that Kenya is a major technology hub in the world, and many have undertaken to study why mobile money was very successful in Kenya. However, the other dark side of mobile money lies in what Kenya missed.

M-PESA's challenges

M-PESA relied on phone numbers as identifiers when sending money. This did not allow people to scroll through their phone books to select a phone number, but one had to type the number manually. This led to many cases where money was sent to the wrong recipient due to mistyping or a case of "fat fingers."

Recently, M-PESA introduced a number confirmation feature where one could confirm the name of the recipient before the transaction was completed. Had this come earlier, there would have been fewer losses experienced through sending money to the wrong number.

Other challenges M-PESA experienced, and in some cases continues to experience, are as follows:

  • Lack of laws governing mobile money fraud - For a long time, Kenya lacked laws that would govern mobile money fraud. This was because the area was majorly unregulated and the Central Bank of Kenya had taken a hands-off approach, a factor that had helped the growth of the mobile money industry. This meant that if you erroneously sent money to a wrong number and the person used the money, there would be no law to convict the person. This has only changed recently.

  • Difficulty reversing M-PESA transactions - Reversing an M-PESA transaction involved contacting the person who you had sent the money, and asking them to send it back to you. This would make the recipient withdraw the money as soon as possible, and so the preferred option was to call Safaricom's customer care line and aski them to reverse the transaction. This was one of the worst customer care initiatives, as it would take longer to reach the ever busy customer care line. In the case that the wrongful recipient had already withdrawn the money, Safaricom would only ask one to report the matter to the police. Of course, most people would not bother to report to the police, as one would end up losing more money while following up the lost money. This is still a problem to date. Safaricom has introduced an easy method of reversing a wrong transaction, but this works if the wrong recipient has not withdrawn the money.

  • Limited user experience documentation - I once met a Chinese professor who was trying to understand the growth of M-PESA in Kenya, and one of the things that he complained about was lack of written sources detailing customer experiences, agents challenges and the problems that were experienced in the rollout. As a global leader in mobile money, he had hoped that he would learn a lot in Kenya. However, it seemed that Kenya did not realize that it was making history by pioneering mobile money and thus failed to keep good records for others to follow and learn. This led to the same problems experienced here being replicated elsewhere, as the professor said.

Perhaps, we need more scholars and researchers putting the Kenyan story together for the rest of the world to learn from.

Cover image credit: M-PESA kiosk in Kenya. Wikimedia Commons