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Mobile Banking Takes Off in Kenya

A new paper by William Jack and Tavneet Suri looks at M-PESA, a mobile-money transfer service in Kenya. Mobile banking has become particularly popular in the developing world, where safe, reliable banking has historically been limited, and often available only to the? wealthy. The authors conclude that M-PESA has been wildly successful in Kenya: “We estimate that M-PESA had reached nearly 40 percent of the adult population after a little more than 2 years of operation, and that now, approaching only the fourth anniversary of its launch, is used by more than two-thirds of households.” Even more interesting: the service is now used by “an ever-broadening cross-section of the population. While it has always been used by a non-negligible share of those with lower economic means, it has quickly expanded its reach into these groups, and is now used by households with a wider range of economic, demographic, and educational characteristics.” M-PESA may offer significant benefits to disadvantaged demographic groups, particularly women, although the authors were unable to explore that question in this paper. “Especially among poorer segments of the population, remittances and transfers received (and sent) via M-PESA are less visible than those transmitted by other means, such as delivery by a friend or relative,” explain Jack and Suri. “Granted this information advantage, recipients could be in a position to keep more of the funds they receive.” In the U.S., meanwhile, mobile banking hasn’t gained much traction yet; but investors are hopeful. [%comments]