Kenya is proving to be a hub of mobile-finance innovation in the developing world, even as mobile-payment systems in the U.S. struggle to build an audience.
The early success in Kenya of M-Pesa is being followed by Standard Chartered PLC's partnership with the Airtel Africa telecommunication company and MasterCard Worldwide on a mobile-based system that enables consumers to make online purchases with international merchants.
Kenya is the first market to use this type of payment product, called PayOnline. Airtel Money consumers in Kenya use their mobile phones to make purchases online from MasterCard merchants globally without a credit card or a physical debit card–two payment tools largely missing from the Kenyan market.
Kenyans already are accepting of mobile transactions. The M-Pesa mobile money service has grown rapidly in the country, boosting its economy (
Earlier this year, Western Union Co. expanded an initiative to enable Kenyan migrants to send funds to recipients in their home country who subscribe to Safaricon’s M-Pesa mobile wallet (
"The Kenyan mobile-money market is very developed," says David Wingfield, head of marketing in Africa for consumer banking at Standard Chartered, which is based in London. "The penetration of mobile money is exceptionally high across all income segments but it has, by nature, been limited to local use."
PayOnline gives more consumers "the ability to use their mobile money and the power of their smartphones to actually shop online, something they could only do before when using a card," he says.
To use PayOnline, consumers request a single-use card number directly from their mobile phone's menu of options. Airtel Money Services then generates the number. Once the purchase has been authorized, a confirmation message is sent to the person's mobile phone.
Consumers must use the single-use number within 24 hours. It is designed to enhance security and prevent unlawful access to users’ funds–a common concern in Kenya that has driven security measures for many of that country's mobile-finance initiatives.
Prices for online items are quoted in euros, U.S. dollars or British pounds, with a transaction fee charged in local currency. Purchases are deducted from the user’s mobile money account.
Kenyans "can see the utility of the mobile money account. [PayOnline] can enable the mobile money account for an e-commerce transaction," says Mung-Ki Woo, MasterCard group executive for mobile.
Rival Visa Inc. has a prepaid product through M-Kesho, an expansion of M-Pesa that leverages a partnership with Equity Bank to open accounts. Visa did not respond to requests for comment by press time.
Airtel Money (which has also been called Zap) is a mobile-payment partnership between Standard Chartered and Airtel that enables deposits, funds transfers and withdrawals via handsets. This is an important element in bringing financial services to underbanked countries that lack physical infrastructure.
More than 20 million consumers in Africa use its service. Standard Chartered's international mobile-banking operation also includes the Apple Inc. iPhone app Breeze and a corporate app called Straight2Bank Mobile.
PayOnline likely will roll out in other Airtel Money markets, pending local regulatory approvals, Wingfield says.
"It allows us to offer our customers more flexibility in terms of their access to payments services," Wingfield says. "Previously our customers could only use their debit cards for online shopping and many customers feel uncomfortable doing this."
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