When trading online, there are a lot of different payment methods that one can use. They all come with their own advantages and disadvantages, different commission fees, limits, and processing time. For some traders, the most important thing is to process the payment instantly, while some might prefer fewer fees and a longer waiting period. Today we are going to discuss one of the most popular payment methods in East Africa, called MPesa.
MPesa is a money transfer service supported by Kenya’s largest network operator and has changed the lives of many people. The best thing about it is that MPesa is super easy to use, and in order to use it, you do not need an internet connection. You can just transfer your money via SMS, which is heavily favored in East Africa. In addition to this, it is a fast, safe, and low-cost way to pay, for companies and individuals. Compared to the traditional payment methods, MPesa is way faster and cheaper, working digitally and in time. This mobile money service allows users to transfer, receive and deposit money in a comfortable manner. The proof of its success is that since MPesa’s creation, a lot of banks around the world have initiated different mobile-money services in an attempt to replicate MPesa’s story, but only a few of them were fortunate. Let’s take a look at how it works, and where you can use it.
How Does MPesa Work?
As we already mentioned, the main reason behind MPesa’s popularity is that it allows users to make money transactions without an internet connection, using a mobile phone’s SIM card. If the customer is in Kenya, he needs to do it with a Safaricom (mobile network operator company) SIM card. You simply put your SIM card into the mobile device’s card slot and then it is possible to receive and send money with SMS messages, as well as make payments and transfers either to family members or companies.
All transactions are performed securely and they are provided with a PIN number. After registering, both parties receive an SMS in order to confirm the amount transferred. Electronic money is delivered instantly to the recipient, who can later redeem it for cash by visiting an agent. MPesa is extremely useful for users that have no bank accounts and access to the internet connection.
Fees
The fees differ depending on how you make the transaction. For instance, if you send money between 50 and 100 KES (Kenyan Shilling) you will have no transfer fee. If you send money between 101 and 500 KES, then the transaction fee is going to be 6 KES for both – MPesa users and other registered mobile money users. However, if you make a transaction with unregistered users, the fee will be higher, in this case, 45 KES.
MPesa users can enjoy free transactions between bank accounts and MPesa. It is important to note that the charges were reduced at the beginning of 2021 by up to 45% – The company made this decision in order to lower value transaction bands.
Speed
When choosing a specific payment method, it is important that you receive your money on time, without waiting for days and weeks. Another good thing about MPesa is that it allows you to make transactions instantly – once you send your money via SMS, another person can redeem it for cash instantly, meaning that the transaction speed is immediate and that is another reason why this payment method is so popular not only with regular users but Forex brokers as well.
Methods
Before the appearance of smartphones, Kenya had very few ways to manage money. With the MPesa, it became possible to avoid visits to the bank or making phone calls. The methods used for transferring money are usually via SMS. Everything is done through the mobile, even the registration is confirmed by the SMS – after registering, you will need to activate the account using the 4-digit PIN sent by SMS.
Do MPesa Brokers Get Regulated?
While dealing with platforms that involve money, it is important that the company you use is regulated. This is a guarantee that if something inconvenient happens, there is a financial regulatory body that will take all the necessary actions to protect you as a customer. The good news is that MPesa is regulated by the financial services regulator (in most cases this is a Central Bank) of each region or country in which it functions.
The communications sector in Kenya is regulated by The Communications Authority of Kenya (also known as CA) which ensures that the citizens of the country receive the best possible services from different companies and MPesa is on the list of them. Besides that, MPesa is also regulated by the Central Bank of Kenya, Kenya Revenue Authority, Capital Markets Authority, Kenya Civil Aviation Authority, etc. What this means is that every customer using MPesa is safe, and they might never have to worry about money or privacy issues as the company provides them with a reasonable and responsible service that is supervised by some of the most reputable authorities available across the country.
Top Countries to Find MPesa Brokers
Considering the fact that MPesa was created back in 2007, over many years, it has started to expand and offer services to customers from many countries. Nowadays, the platform has more than 40 million users alone in African countries including Ghana, Kenya, Egypt, Tanzania, Congo, Tanzania, and Mozambique. It is also possible to use MPesa in Eastern Europe, South Africa, India, and the full list of countries can be found on their main webpage.
While it is true that MPesa has had some challenges and problems in the past, it still was able to overcome them and be one of the most secure and popular payment methods available across different parts of the world.
Kenya
It was impossible to not start our list with Kenya, which is the most successful case of implementing MPesa’s services. The fact that people living in rural areas of Kenya did not have access to money, and the nearest bank was several days’ walk, made it possible for MPesa to solve such problems and actually make it possible for people to easily make payments by texting a password and requesting money. The simple system of mobile banking made a significant difference for families not having access to money.
The appearance of MPesa did not only solve simple problems of transferring money but also helped the economy – according to different studies, mobile money increased self-employment and made the overall situation much better.
Afghanistan
MPesa was launched in Afghanistan in 2008 and is one of the top countries that has a lot of Forex brokers accepting deposits and withdrawals via this financial solution. In the beginning, the service was used just for policemen’s salaries, which solved the corruption problem that was related to the previous paying model. It became so successful that services have been expanded to standard payments, peer-to-peer transfers, merchant payments, etc. The reason behind the popularity of MPesa is that Afghanistan is one of the developing countries whose economies can easily be transformed by mobile money which allows people to send money by text message.
Tanzania
Tanzania is another country where MPesa has become an important part of the Forex trading industry. The service was not very successful in the beginning. According to the International Finance Corporation’s report, it had many issues and needed additional strategic changes in order for the company to improve and strengthen its market position. Over the years, citizens of Tanzania have seen multiple changes, adjustments, and improvements which caused the rise of its popularity and success.
MPesa Compared to Wire/Bank Transfer
As we already mentioned earlier in this review, MPesa offers a reliable, fast, and safe way to receive, store, and transfer money. Compared to wire or bank transfers, using MPesa is cheaper and faster. The most valuable thing is that since every transaction is signed and protected with a PIN, it is a guarantee of safety.
Another plus of using MPesa is its transaction speed. After the payment is approved, it is just a matter of minutes to go to the agent and take your money, while with other pa
yment methods you might have to wait for several hours or days in order to receive your money. The majority of payment methods offered by different FX Brokers might also involve transaction fees which can vary depending on what you use. With MPesa, the fees are relatively low, and they have been reduced by 45% making it cheaper for you to use it.
And finally, we believe that the best thing about MPesa is that it is very comfortable to use, meaning that you do not need to visit a bank or make phone calls, everything is simply done digitally, with your mobile and SIM card. MPesa helps you to cut costs and reduce the risks of carrying cash, while banks always look for cost reduction which may lead to more transactions, more time, and more inconvenience.
Final Words on MPesa Brokers
MPesa has gained a lot of popularity since its creation and still is a very big part of FX trading not only in Kenya but in many other countries. There are a lot of people who are using this payment method and the number is growing daily. Some might say that MPesa might need a few adjustments, but considering the fact that it has faced some challenges in the past and was able to overcome them, we believe that the future is bright.
We think that it is important for all Forex brokers to have access to comfortable, safe, and fast payment methods and MPesa has it all. This is not only a handful tool for Forex trading but has a huge impact on the financial sectors of the country, which makes it even stronger and attractive.
