M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007.We examine how M-Pesa is used as well as its economic impacts.Analyzing data from two waves of individual data on financial access in Kenya, we find that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked.Using aggregate data, we calculate the velocity of M-Pesa at roughly four person-to-person transfers per month.In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union.While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.
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