News / Economy

Africa's M-Pesa Mobile Payment Method Debuts in Romania

A Vodafone employee shows M-Pesa's text message transactions option on a mobile phone, in Bucharest, April 2014.
A Vodafone employee shows M-Pesa's text message transactions option on a mobile phone, in Bucharest, April 2014.
Lisa Bryant

In a trend reversal, African technology has migrated to Europe with the launch in Romania of Kenya's popular M-Pesa mobile money transfer system.

Mobile payments have changed the way many Africans -- and the humanitarian community -- do business. It remains to be seen, though, whether it will enjoy the same success in Europe.

Meaning "mobile money" in Swahili, M-Pesa is credited with transforming the lives of millions of Africans who have little or no access to conventional banking services. The concept is simple: M-Pesa customers can receive and send money through their mobile phones using simple text messaging technology.

From its debut in Kenya seven years ago, the mobile phone transfer system has since expanded to half a dozen African countries - including in the Democratic Republic of Congo. Telecommunications company Vodafone, which developed the technology, also has introduced it to India and Fiji. Now Vodafone has set its sights on Europe with the rollout of M-Pesa last month in Romania.

European focus

"We chose Romania because there was, and there is still, a large part of the population which doesn't have a bank account," said Claire Alexandre, who leads M-Pesa's Commercial and Strategy team within the Vodafone group. "Only about 50 percent of the population of Romania has a bank account. And the other half is mostly still using cash."

Alexandre said even Romanians who have bank accounts mostly use them to withdraw their salaries. They then depend on cash transactions for the rest of the month.

That's a habit Vodafone wants to change. The company says it's too early to talk about the number of M-Pesa customers there, but it's clear that Africa -- where mobile phone use has exploded -- offers a lesson for Europe.

"Looking at how people communicate with each other, how they interact with each other, we realized that people talk to each other, but often they need to send or to receive money from each other," said Alexandre. "So we've expanded that further. So if you look at those basic needs, then there are other markets where those needs haven't been met either. And we saw that was actually the case in Romania."

So far, Vodafone hasn't announced any plans to expand elsewhere in Europe. Experts suggest it might be eyeing other markets, though, in eastern and central Europe. Whether M-Pesa will thrive there, as in Africa, remains to be seen.

Along with ordinary people, the humanitarian community also is adopting M-Pesa technology as a handy way to offer cash assistance to needy communities, including refugees and those hit by disasters. There's one constant in all these scenarios. Alexandre said markets seem to like the brand name. So wherever it next travels, M-Pesa will keep its moniker and its Swahili roots.

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by: Hello from: Canada
August 15, 2014 2:15 AM
In canada, I can send money by emailing the amount to anyone who has a Canadian bank account. It's $1.50 fee for the sender, no fee for the receiver.

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