Enabling Mobile Money Transfer: The Central Bank of Kenya’s Treatment of M-Pesa

This case study discusses the  development of the M-Pesa mobile payment product from its inception in 2005 to December 2008. It looks at the Central Bank of Kenya’s (CBK) process of auditing the risk involved in the use of M-Pesa and determines how it fits into the existing regulatory framework. This case study discusses the following topics in detail:

• Framing of the evidence with a focus on the legal status of M-Pesa, the illicit use of M-Pesa for money laundering, and the operational risks involved in the use of this new technology;
• Demand side and consumer experience with a focus on customer usage of M-Pesa as compared to other money transfer products followed by an overview of the supervision process;
• Public distribution with a focus on the role of the CBK in the due diligence and monitoring of M-Pesa services;
• Description of M-Pesa's service in relation to existing regulations and an overview of the authorization process of the M-Pesa application;
• Impact of the audit on CBK supervision, due diligence, and the development of a more robust system of monitoring M-Pesa.