This note examines some of the savings and related services offered to the low income market segment using M-PESA ‘rails’, and highlights the challenges they face. The institutions using M-PESA are working in different areas of financial services, offering savings, loans, health and life insurance, pension and investment products.

It concludes that: 1. the whole cycle of deposit and withdrawal (or indeed loan repayment) through M-PESA therefore becomes an expensive proposition for the customer; and 2. at present financial institutions appear unsure about the overall costs and benefits arising out of their partnerships with M-PESA. All are busy sorting out the operational issues due to integration challenges, and the difficulties of communicating the proposition to customers.

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