PEP has been a leading player in Kenya's mobile banking revolution M-PESA, which has given the 'unbanked' masses access to financial services, and brought them into the formal economy.
In Kenya, where the majority still do not have bank accounts, M-PESA (Swahili for 'mobile money') has created an alternative to banks. M-PESA customers safe, withdraw, make payments or send money using their mobile phones. For each transaction (transfer, withdrawal and deposit) the customer's account is being charged a small fee. The charges range between 0.5 to 1.0% of the amount involved.
Since the launch early 2007 Safaricom has registered over 8 million M-PESA subscribers, taking total value of P2P transactions in March 2009 to Kshs.17 billion (170 million).
Besides registering new customers, M-PESA Â agents such as PEP's are accepting cash deposits and giving cash for electronic value vice versa. Part of the commission paid for each transaction by the customer is being credited to the agent's account by Safaricom, based upon the model detailed below.
At the end of the month the total commissions are being rolled up and paid out to the agent. By mid 2009 PEP manages over 100 agency stores and is M-PESA's leading cash distribution network in the region
M-PESA stores provide the critical nexus between digital or electronic money and physical cash. It is their job to take customer's cash and to provide cash to them on demand and effectively buying and selling M-PESA float for cash or visa versa.
Their task is therefore to maintain enough liquidity in terms of both cash and M-PESA balance to be able to meet customer requests for cash in and cash out.
If they take too many customer cash deposits, stores will find themselves out running out of M-PESA float with which to fund customer's accounts; if they do too many withdrawals they will accumulate plenty of float but will run out of cash.
Thus, they have to rebalance their holdings of cash versus float. PEP's key to success is driven by its cash distribution circles among its agency network.