Abstract |
Abstract
M-PESA is a
remarkably successful mobile payments system launched in Kenya three years ago.
Users are able to send money to each other conveniently from their M-PESA using
only their mobile phones. A key to the success of M-PESA is the availability of
an extensive network of retail shops that accept M-PESA deposits and
withdrawals, i.e. they stand ready to exchange cash and electronic value. It is
the stores that provide liquidity to the system, and they are paid a commission
by M-PESA for this service. Behind the store is a network of intermediaries
that arrange the logistics around cash management. In this paper we look at
daily transactional data from six M-PESA stores in Western Kenya supplemented
by case studies and interviews of M-PESA store managers and employees in order
to better understand the liquidity management needs of these stores. We examine
how liquidity needs vary by location and day of week/month, and by the level of
service offered by the store. We find that stores require intense daily
management of liquidity to maintain customer service levels and that this is
more difficult in rural areas. We also find some evidence of market discipline
for agents who can’t maintain service levels.
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