M-PESA at the point of sale: Expanding financial inclusion and reducing demand for physical cash

Holti Banka
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Holti Banka: PhD at the School of Public Policy, University of Maryland, USA

Journal of Payments Strategy & Systems, 2014, vol. 7, issue 4, 359-369

Abstract: This paper proposes the idea of the M-PESA service being used for purchases at the point of sale (POS). In some large supermarkets in Kenya, customers are able to use M-PESA for payments, but those transactions are recorded as transfers and, as such, transfer fees apply. Safaricom recently launched a platform for bill payments in restaurants through M-PESA, and the expansion of this service to smaller stores in rural areas would have quite an impact on the process of financial inclusion. The paper also offers a comparative perspective between cash withdrawal fees and transfer fees through M-PESA, arguing that adjustments need to be made to the pricing scheme if Safaricom is to employ POS payments. On the cost side, the idea of POS payments would reduce demand for physical cash and reduce operational costs for Safaricom. Additionally, the paper proposes the idea of combining merchants with M-PESA agents, in order to reduce fixed and training costs, which could further allow for downward adjustments in the price of new payment services at POS from Safaricom.

Keywords: M-PESA; POS; financial inclusion; cash; merchants (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2014:v:7:i:4:p:359-369

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