2006

In 2006, the most common methods to send or receive money were through friends, bus companies, or the post office.

• Friends :
  Over 50 percent of people sent money using friends
  Close to 50 percent received money via this medium.
• Approximately 20 percent sent money using the post office,
  Close to 30 percent received funds this way.
• Other formal methods such as sending money through banks or money transfer companies like Western Union were less common with less than 10 percent using these methods to send or receive funds.

2007

The inception of the mobile banking service called M-Pesa in 2007 has dramatically changed the money transfer market.

2009

M-Pesa was the leading money transfer method with over 65 percent receiving funds through the system in 2009
The use of post office products, bus companies, and formal channels such as Western Union and banks, where between 3.5 percent and 0.4 percent of individuals now use these methods to send or receive money
However, sending and receiving funds through friends remains a popular means of money transfer, where 33 percent of individuals send money via a friend and 22 percent receive funds through a friend in 2009

Data on M-Pesa use from the 2009 Finacess Survey in descending order of frequency.

M-Pesa is a Vodaphone service in Kenya

3 basic transactions that customers conduct with M-Pesa:

1. « cash-in transaction » > deposit money at an M-Pesa outlet in return for e-float

   The customers shows:
   • Valid identification document
   • His identity
   • The amount of the deposit

   the whole transaction takes about a minute or less. (unless the system is running slowly)

2. « cash out transaction » > Exchange e-float for cash at an M-Pesa outlet.

   The customers must show:
   • A valid identification document, and the transaction is logged
   • The customer tells the shop clerk how much cash he/she wants, then chooses « withdraw cash » on the M-Pesa menu on his phone
   • Enters the amount to be withdrawn (plus the relevant fee), and enters the agent number.
   • The agent then receives a text indicating that the transaction is complete, and the agent then gives the appropriate amount of cash to the customer. This whole transaction takes about one minute.

3. « Person-to-person transfer » > Transfer e-float from a phone to another phone. ( even though one or both of the parties may be an institution or firm)

   The customers must show:
   • the phone number of the recipient and the amount to be transferred on his/her cellphone.
   • The sender and recipient each receive a text message stating that money has been transferred.

This 3 transaction can be combined in a number of ways.

M-Pesa is a Vodaphone service in Kenya
Sources : http://www.nber.org/papers/w17129.pdf

Example with M-PESA which was introduced by Safaricom in Kenya in 2007. It is a mobile payment system based on accounts held by the operator, with transactions authorised and recorded in real time using secure SMS. Retail stores are paid for converting cash into electronic value, and vice versa. After two years of operation, the amount of retail outlets had surpassed the number of post offices in the country and currently represents a network of 39,000 retail stores. At present, M-PESA has approximately 15 million customers and contributes with 15.8% of Safaricom’s revenues.
Sources gsma.com (page 55 on http://www.gsma.com/publicpolicy/wp-content/uploads/2013/01/gsma_ssamo_full_web_11_12-1.pdf)