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From the Bank to the Bazaar: mobile Banking and second-order Networks in low-income countries

Abstract : This paper examines M-PESA, Kenya's mobile payment model, as a contemporary case of innovation and differentiation in information and communication technologies (ICTs) on the global economic periphery. It draws on reports and survey data from the International Telecommunications Union, the World Bank, Safaricom, Vodafone, and the Government of Kenya, and is intended as preparatory research for an ethnographic study of M-PESA users. The paper conceptualizes mobile payment models as secondorder networks (application add-ons to existing hardware networks) and argues that in the near- and medium-term, mobile payment will challenge existing norms in communication and finance in Kenya and other low-income countries.The origins of M-PESA lie in informal transfers of cellular minutes among users who preferred to trade in cellular minutes than in Kenyan Shilling notes. In 2003 the mobile provider Safaricom formalized these transfers by creating e-float, a digital version of the Kenyan Shilling. Today MPESA is a national payment network linking millions of Kenyans financially via mobile phones. M-PESA's growth is the result of factors specific to Kenya: with counterfeit Shillings in wide circulation, consumers were willing to place their trust in e-float, the electronic version of the Kenyan Shilling. M-PESA also reveals lessons generalizable to other countries with limited communications and transportation infrastructure. Kenya's experience since 2003 shows how a chronic infrastructural 'weakness' in telecommunications can become an unimagined strength. Kenya and most other low-income countries' landline networks are limited and localized, making national adoption of mobile telecommunications possible without significant government investment or reconfiguration of legacy networks.This case study offers several lessons as we conceptualize emerging norms in global telecommunications. First is the heightened value of mobile payment in countries with informal 'bazaar' economics: mobile payment can serve as an enabling technology for citizens excluded from the banking system, and who remain at the mercy of widelycounterfeited currencies. Second, mobile payment models permit small transfers of money that would be prohibitively expensive using traditional banking. This facilitates worker remittances within Kenya and provides geographically isolated members of families or tribes with access to outside capital. Third, M-PESA helps explain why societies put universal technologies to use in different ways. In a specific economic and cultural context, M-PESA has offered an alternative medium of exchange for Kenyans dissatisfied with the norms -- counterfeiting, lineups at banks, getting change -- associated with cash. To varying degrees, each of these lessons is generalizable to other low-income countries experiencing major expansion of their mobile networks.At the same time, M-PESA leaves questions unanswered. At the same time as it empowers users and reveals the potential for low-income countries to establish universal telephone service, M-PESA presents a challenge for regulators. For now, M-PESA stops at Kenya's borders because that is where the networks stop. But this could change: technologically there is little stopping the expansion of mobile payment across borders. Such a development could challenge not only communicative norms, but also norms in remittances, taxation, money laundering, and the financing of criminal activity. In countries the United States and parts of the European Union, governments could find themselves facing large outflows of capital via small mobile payments of remittances. Kenya's telecommunications future is also unclear. At first glance, M-PESA offers a useful medium of exchange in a cultural setting where it has been widely adopted, with few costs. But M-PESA has its problems: recent developments have raised questions about the security of e-float, user privacy, and relations between Safaricom and the Kenyan government. And as much as M-PESA appears to be a user-enabling technology, it is also part of a larger political economy that favors telecom giants: M-PESA is highly profitable service offered by the largest mobile provider in Kenya(Safaricom), a subsidiary of a large foreign multinational (Vodafone). Much is at stake and it is unclear who will emerge as winners: users, domestic or foreign service providers, governments, or non-state actors seeking more room to move. And today's snapshot gives only a few clues to how cross-border mobile payments would affect culture, language, and politics in areas served by the network. Suffice to say that these are major issues that will require further study and debate in the coming years.
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Contributor : Compte Laboratoire Geriico <>
Submitted on : Tuesday, July 2, 2013 - 6:18:53 PM
Last modification on : Thursday, July 4, 2013 - 12:17:47 PM


  • HAL Id : hal-00840685, version 1



Colin Agur. From the Bank to the Bazaar: mobile Banking and second-order Networks in low-income countries. Communiquer dans un monde de normes. L'information et la communication dans les enjeux contemporains de la " mondialisation "., Mar 2012, France. ⟨hal-00840685⟩



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