M-Pesa innovation products of Safari

M-Pesa intro products of SafariCHAPETER 1BACKGROUND OF THE PROBLEMM-Pesa is one of the ingenious innovation products of Safari- com Kenya, it is a expeditious silver transfer that enables Safari-com subscribers to intrust and receive gold to anyone of the diligent network. It was developed by Vodafone, which holds a 35% parcel in Safari-com. The M stands for mobile. Pesa is Swahili for capital. Since its introduction in March of 2007, the M-PESA money transfer system has seen its popularity with the un- situateed universe of discourse surge, making the application a great success all over the country. For example, between March 2007 and September 2008, M-pesa psyche to person transfers hit the Sh54 billion mark with December alone last year accounting for an supererogatory Sh14 billion. To call M-PESA a success would be an understatement. Today you merchant ship use your phone to deport for cab rides and electricity, to get money out of automatic tellers without owning an ATM card or even having a traditional money box account. This has ca apply jitters in the banking industry. It is worthy noting here that close of the Kenyas live in local out-of-door countrys and do not have opening to banking work.The M-PESA service does not require users to have bank accounts. e rattling(prenominal) they need to do is register at an authorized M-PESA agent by providing their Safari-com mobile number and their denomination card. Once registered, the user can buy digital property at any M-Pesa agent and send that electronic specie to any other mobile phone user in Kenya by SMS. Recipients can either redeem this for conventional property at M-Pesa agent outlets or buy Safari-com business linetime for themselves and other subscribers. An M-Pesa-enabled mobile phone can also function as an electronic wallet, holding up to 500 (50,000 Kenyan shillings).The service has lowered transaction costs for users in terms of money, time and risk. An urban dwelle r that use to send money to his nuclear family, other relatives or anyone else using the post office, bus operate or friends traveling home can now remit funds quickly and safely for a downhearted fee. The recipient can thus obtain cash using an M-pesa agent of choice. The service is being use to make payments for lower value goods and services, thus increasing the velocity of business. You can haggle with a falconer on the street and make an electronic payment for whatever you buy. Instead of traveling upcountry to pay school fees or cater for unforeseen expenses, parents can now agree with friends or teachers to make payments on their behalf after getting the money transferred electronically to them. People who were too poor to open a bank account can now have a transaction account at their disposal. Only near 2 million Kenyans have bank accounts out of a population of close to 36 million. Therefore, the capableness to broaden access to financial services is massive. Though the product has is clearly gained prominence among the low income earners, utmost income earners Small and medium organizations it has not gone down well with the major Banking key players who are oppose it. 90% of Kenyans do not have an account in a regular bank. Across Africa, whole 20% of families have formal bank accounts, according to a World Bank survey. In Tanzania the dower is as low as 5%, and in Liberia 15%. But the proliferation of mobile telephone services around the continent has opened a new way to extend financial service1.1 investigate questionsWhat are the financial needs that M-Pesa meets as an agent of money transfer? Is the M-Pesa product reliable and well-disposed in meeting the financial needs in Kenya?1.2 Research Objectives1. To drive out the effects/ contri notwithstandingions of M-Pesa as a product of Safari com to society2. Find out the impacts of M-Pesa in the banking sector in Kenya3. To find out who are the main population segments targeted by M -Pesa product in Kenya 4. To find out the methodologies used by Safari com as an M-Pesa provider to satisfy customers needsRATIONALE OF THE RESEARCHKnown as M-pesa, or mobile money, the service is expected to revolutionize banking in a country where more than 80% of people are excluded from the formal financial sector. Apart from transferring cash a service much in demand among urban Kenyans supporting relatives in rural scene of actions, customers of the Safaricom network volition be able to hold up up to 50,000 shillings (370) in a virtual account on their handsets. Mobile phone growth in Kenya, as in most of Africa, has been remarkable, even among the rural poor. In June 1999 Kenya had 15,000 mobile subscribers. Today it has nearly 8 million out of a population of 35 million. In time, M-pesa provide allow people to latch on and repay money, and make purchases. Companies will be able to pay salaries directly into workers phones something that has already attracted the interes t of boastfulr employers, such as the tea companies, whose workers often have to be paid in cash as they do not have bank accounts. The M-pesa project is being watched closely by mobile operators around the world as a way of targeting the multibillion pound international cash transfer industry long dominated by companies such as Western Union and Money gram. According to the World Bank, remittances send from nearly 200 million migrant workers to developing countries totalled 102bn in the year 2007. The GSM Association, which represents more than 700 mobile operators worldwide, believes this could quatern by 2012 if transfers by SMS become the norm. Vodafone has entered a partnership with Citigroup that would soon allow Kenyans in the UK to send money home via text message. The charge for sending 50 is expected to be about 3, less than a third of what some traditional services charge. SMEs in Kenya are making use of M-pesa. This is generally because the service has been found to be liquid, flexible, acceptable, safe and reliable. M-pesa has also had an impact on microfinance institutions since members send virtual funds to their group leader, and the group leaders give the funds to the microfinance organization. Users can send between 100 Kenyan shillings ($1.5) and 35,000 shillings ($530) via a text message to a desired recipient even someone using a different mobile network. The recipient then can obtain the cash from a Safaricom agent by entering a secret code and showing personal identification.M-pesa gives people too much access (24/7) to their cash which could undermine saving culture. Analysis shows that the M-PESA-based cash transfers are secure, enable a quick sine qua non response, are cost-effective and empower communities. Cash transfers give households access to a wider range of commodities. The injection of cash also strengthened the local economy. The role of information technology in empowering the poor the ability of mobile phones to sen d SMS expands the range of cheap communication available to the poor. Isolated communities now know how to receive remittances by using M-PESA. Communities also see advantages in using their mobile phones to develop early warning and security measure alarm systems to prevent cattle-rustling. Women also see income-generating opportunities by offering informal payphone services to other members of the community.Chapter 2LITERATURE REVIEWThe increasing speed of transactions has been a critical part of the innovation process. At the cutting edge of money technology, bodied America is moving beyond batch processing and air couriers, to networks for integrated accounting and payments processing systems. The definition of an instantaneous money transfernot by check, but by ATM or direct computer connectionis moving inexorably toward real time, on a par with exchanges of currency, but without the need to be physically face-to-face. And the closer technology brings us to real-time remote p ayments, the closer we are to genuine 24-hour banking and trading, and a worldwide set of assets that might be used for wealth storage, at to the lowest degree for those who are willing to accept some currency risk. Firstly, it is the young, male, urban migrants who are driving the uptake of services customer adoption. Being early adopters of technology, these migrants are usually better educated and earn higher incomes than those in the village. Because these migrants are the senders, they can choose the channel for money transfer. They then influence recipients in the rural areawho are usually female, less educated and poorerto also use M-pesa.M-pesa has been successful because it relies on traditional practices and structures and modernizes these features. It is thence a model based on indigenous payment practices, extended mobile phone networks and a large distribution network. With this service, Kenyans can open up a digital account on the cell phone, send and receive money , pay bills like electricity and obtain consultation. Users can also withdraw money from ATMs The distribution network is based on agents who were already present in markets. Agents receive basic prep from M-pesa. Only three months after the launch of M-pesa, the service had 400 agents, compared to 450 bank branches and 600 ATMs in Kenya. By middle 2009 M-pesa had 3400 agents. Safaricoms M-pesa service in Kenya was one of 10 private sector initiatives in 2008 to be accept by the World Business and Development Award as making a significant function to the UN Millennium Development Goals. M-pesa has also been recognized by several other allows, including Stockholm Challenge 2008 Winner, economic Development category ( M-pesa)Kenyan Banking Awards 2007 and 2008 Special Award for Product Innovation (M-pesa)Global Mobile Awards 2008 Nominated, top hat use of Mobile for Social and Economic Development (M-pesa)Global Mobile Awards 2008 Winner, Best Broadcast technical (M-pesa Send Money Home TVC)AfricaCom Awards 2008 Changing Lives award and Best Solution for Rural Services awardMSK Warrior Awards 2008 Best Innovation.Kenyas independent Financial Sector Deepening Trust (FSD), which aims to support the development of comprehensive financial markets in Kenya, carried out a survey of M-pesa use in 2008. The survey aimed at establishlishing the opportunities and challenges presented by the service and how it could be introduced in other countries. The survey of 3,000 randomly selected households across Kenya, 300 randomly selected M-pesa agents and 50 M-pesa Head offices found almost 40% of households use M-pesa, with 63% sending regular financial support. Of those surveyed 90% believe their money is safe with M-pesa81% find M-pesa very easy to use and a that 15% say it is quite easy to use84% say losing M-pesa would have a large negative effect.Compared with alternatives, those surveyed find M-pesa is Quicker (98%)More convenient (96%)Safer (98%)Cheaper (96%)Concern Worldwide pioneered the use of M-pesa for bulk cash transfers during the post-election emergency in early 2008 in the Kerio Valley, one of the remotest parts of Kenya. During the violence, cattle rustlers attacked communities in the Kerio Valley, looting their breed and displacing them. Concerns initial response was to provide food aid, but carrying and distributing food proved very costly and insecure. Cash transfers were seen as a way of overcoming the challenges posed by the terrain and the security situation.Chapter 3 methodologyThe test will be based in Nakuru a town which is surrounded by a network of small village towns, also comprising of low and middle income earnersThe study proposes to use both alternative data and primary data to achieve its objectives. The secondary data will be obtained from Safari-com website on issues of corporate and social responsibility, monthly newsletters and annual reports.The interrogation will prefer qualitative as it is con sidered as the most appropriate on account of it being amenable to use of innovative techniques in exploring relatively unknown research areas (kamoche, 2001 Yin 1994).The research worker will also use mixture of research methods and these are semi coordinate questionnaires, surveys and oral interviews to collect data.Quota sampling will also be used to collect data regarding population segments targeted by M-Pesa product.3.1 Data analysis and methodsThe data will be summarized and classified in terms of inconsistent objectives of the study in order to enhanced further analysis and processing. The responses to the various items will be coded then keyed in a matrix for this purpose. The data will be entered, edited and cleansed to ensure moderate entry of the response. Descriptive (frequencies, means, standard deviations and graphical illustrations) will be used for the analysis to help in establishing the findings on the objectives of the study3.2 Information Validity and Relia bilityThe questionnaire will be pre-tested with Safari com to authentic reliability. The pre- examination study/pilot study will be done, 100 km from Nakuru away from the study area and will be done to avoid any possible influence on trial respondents forrader the actual survey4 REFLECTIONSDue to the size of general population in Kenya, time deep down which the research should be completed and the cost that would be involved if all the country were studied, the study will cover a cross section of Nakuru residents who will be represent the rest of the country.This study then proposes to use cross sectional survey because it is cheap to do and the results from the sample can be inferred to the bigger populationThe M-Pesa product has been in the market for a barely two years and therefore there isnt much literature about it however the results from this research will guide future research in this area4.1 Ethical issuesThe first step was to seek permission from management by pen a letter to Safari-com management. This was important get authorization.Since various people including Safari- com employees, general public and other stakeholders will be interviewed it is important to seek permission from these people before interviewing or giving them questionnaires.Before scratch had the researcher will seek permission from management by writing while assuring them that the replica of research would be provided and none will be published outside without their permission. Under no pot would personal details to be divulged according to the data protection Act. It will be responsibility of the researcher to assure participants that it will be their sole decision to comment or give opinion. Another important issue is time and therefore it is upon the researcher to find time for interviews not to disrupt any organizations business.REFERENCESAlice t. Liu Michael K. Mithika- the credit bureau and m banking research study- USAID, April2009.http//news.bbc.co.uk/busine ss Mobile phone lifeline for worlds poor, 27/02/07http//www.cato.org/pubs/books/money15.htmlhttp//globaltechforum.eiu.com/index, Kenya Safaricom aims for the big plot02/08/2007.http//www.gurdian.co.uk/ Kenya sets world Kenya sets world first with money transfers by mobile, 20/03/2007 http//www.safaricom.co.ke, Annual results presentation, 21/05/2009http//www.the times100.co.uk/ case study Kenyans to use mobile phones to pay utility bills