How Mpesa Works

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en_USsw

What is Mpesa? M-Pesa is an innovative way of storing and transferring money by the use of mobile phones. It has an enormous customer base in Kenya. It was originally launched in 2007 in Kenya by Vodafone. So far it has spread to other countries like ​Ghana, Egypt, Democratic Republic of Congo, Mozambique, Tanzania, Lesotho, Afghanistan, South Africa, India and Romania.

Mpesa can be integrated with local banks as well as global mobile wallets and fintech such Skrill, PayPal and Payoneer. This is very useful for online freelancers who use such payment platforms to receive their payments.

Buy crypto with Mpesa: As crypto adoption continues to grow across Africa, find out how you can buy crypto using Mpesa

M-Pesa lets you store money in your phone

M-Pesa users can store money in their phones and send or withdraw it at a small fee. It is free to top up airtime for your phone or another phone number. It is also free to make M-Pesa deposits.

M-Pesa has many agents and it is a branchless banking service. M-Pesa can be used to deposit, withdraw, transfer money, top up airtime and pay for goods and services using Lipa na MPesa.

An infographic explaining where M-pesa stood in 2017 after 10 years of operation.

M-Pesa for Businesses

It is also used in business since many people in the formal and formal businesses are using M-Pesa to buy and sell goods and services. They also use M-Pesa to bank their daily proceeds from business. Besides, M-Pesa has employed millions of Kenyans who operate mobile money business in Kenya as MPesa agents and other MPesa services.

Mpesa Paybill and Mpesa gateway features have also allowed businesses and organisation to collect money on a regular basis from their customers through M-PESA.

Mpesa Paybill Numbers

How do I find my Mpesa Paybill number? To find your Mpesa Paybill number is simple. You can use Mpesa tools online or use the steps below on your phone.

  • Dial *234# on your Safaricom number.
  • On the USSD Service Menu, select option 2, My M-Pesa information.
  • Select option 4, Business Numbers.
  • Type in the name of the business and tap “Ok”.
  • The Paybill number to be displayed on your screen.

Benefits of Using M-Pesa

  • M-Pesa has collaborated with many of the Kenyan banks so that you can deposit or withdraw cash to and from your bank account using M-Pesa. One of such collaborations is Mpesa Cooperative Bank.
  • Safaricom has introduced pay bill numbers for businesses and entities which you can use to pay for goods and services.
  • Also, you can access personal and business loans from M-Pesa or using Mpesa such as Tala loans in a few seconds. M-Pesa has products known as Mshwari and KCB M-Pesa which you can use to borrow a loan.
  • You can also deposit money to Mshwari and KCB M-Pesa and earn interest.
  • M-Pesa agents are available in the rural areas hence you don’t need to travel to deposit or withdraw money.
  • Among the other benefits of M-Pesa, it is locally available even in rural areas, cheap transaction rates, you can top up airtime, transfer money and also receive money from other M-Pesa users.
  • In case you send money to the wrong person, you can reverse the transaction and recover the money back to your phone.
  • You can use Mpesa with platforms such Skrill, PayPal and Payoneer

Mpesa Limits

Mpesa transaction limit is Ksh 150,000. Mpesa maximum balance one can hold in their wallet is Ksh 300,000. 300k is the Mpesa maximum limit for daily transactions.

M-Pesa Withdrawal Charges and MPesa Transfer Charges

M-Pesa makes change to both withdrawal and transfer charges from time to time. This happens especially due to government policies such as taxation. For instance, in 2018, there was a slight increase in the charges due to increase in taxation rates by the government. However, these are the Mpesa 2021 charges.

Minimum (Ksh)Maximum (Ksh)Mpesa Transfer to other M-PESA UsersMpesa Transfer Charges to Unregistered UsersMpesa Withdrawal Charges From M-PESA Agent
149FreeN/AN/A
50100FreeN/A10
10150064527
5011,000124928
1,0011,500225928
1,5012,500327428
2,5013,5005111250
3,5015,0005513567
5,0017,5007516684
7,50110,00087205112
10,00115,00097265162
15,00120,000102288180
20,00135,000105309191
35,00150,000105N/A270
50,00170,000105N/A300

M-Pesa Transfers to Banks in Kenya

You can transfer money from M-Pesa account to your local bank and vice versa. Some of the Kenyan banks that you can use M-Pesa to transact include Barclays Bank, KCB Bank, Equity Bank, and Cooperative Bank.

M-Pesa to Barclays Bank

  1. From your M-Pesa menu, select Lipa na M-Pesa
  2. Select Paybill
  3. Select Enter Business Number and enter 303030 which is the Barclays Bank business number and press OK
  4. Enter the Barclays Bank account number you want to transfer to and press OK
  5. Enter the preferred amount you are depositing
  6. Enter your M-Pesa PIN and press OK
  7. Verify the details you entered and press OK
  8. You will receive a confirmation message from M-Pesa and Barclays Bank

M-Pesa to KCB Bank

  1. From your M-Pesa menu, select Lipa na M-Pesa
  2. Select Paybill
  3. Select Enter Business Number and enter 522522 which is the KCB Bank business number and press OK
  4. Enter the KCB Bank account number you want to transfer to and press OK
  5. Enter the preferred amount you are depositing
  6. Enter your M-Pesa PIN and press OK
  7. Verify the details you entered and press OK
  8. You will receive confirmation message from M-Pesa and KCB Bank

M-Pesa to Equity Bank

  1. From your Mpesa menu, select Lipa na M-Pesa
  2. Select Paybill
  3. Select Enter Business Number and enter 247247 which is the Equity Bank business number and press OK
  4. Enter the Equity Bank account number you want to transfer to and press OK
  5. Enter the preferred amount you are depositing
  6. Enter your M-Pesa and press OK
  7. Verify the details you entered and press OK
  8. You will receive confirmation message from M-Pesa and Equity Bank

M-Pesa to Cooperative Bank

  1. From your M-Pesa menu, select Lipa na M-Pesa
  2. Select Paybill
  3. Select Enter Business Number and enter 400222 which is the Cooperative Bank business number and press OK
  4. Enter the Cooperative Bank account number you want to transfer to and press OK
  5. Enter the preferred amount you are depositing
  6. Enter your M-Pesa PIN and press OK
  7. Verify the details you entered and press OK
  8. You will receive confirmation message from M-Pesa and Cooperative Bank

Read: Mpesa Cooperative Bank Review

Transfers to Airtel, Payoneer, PayPal and Skrill

You can also transfer money from M-Pesa to other mobile wallets services such as Airtel, PayPal, Payoneer and Skrill.

Mpesa to Airtel

  1. Dial *234#
  2. Select M-Pesa products
  3. Enter 98 to go to more options
  4. Select M-Pesa Tuma pesa popote
  5. Enter the airtel number you are sending money to
  6. Enter your M-Pesa Pin

M-Pesa to PayPal

  1. Log in to your PayPal account
  2. Click Get started from your PayPal interface
  3. Select top up to PayPal account
  4. Calculate the amount of US Dollars you want to deposit in PayPal
  5. You will see the amount in Kenyan Shillings to deposit using M-Pesa
  6. Open Mpesa and select Lipa na M-Pesa and the Paybill
  7. Enter 800088 as the business number and your phone number as the account number
  8. Verify the details and press OK

Read: Complete Review of Mpesa to PayPal / PayPal to Mpesa

M-Pesa to Skrill

  1. Go to M-Pesa and select paybill
  2. Enter 640057 as the Paybill number
  3. The account number will be generated automatically by Eastpesa
  4. Login to your Skrill account
  5. Pay the amount and the send
  6. You will receive confirm message of their Skrill available amount

Read: Complete Review of Mpesa to Skrill / Skrill to Mpesa

Integrating M-pesa with a website

You can integrate your website with M-Pesa gateway. You can test the website integration by use of a test short code. Some of the things you need to integrate your website to M-Pesa is to create an account at Safaricom Developer Portal. You will need to provide your first name, last name, account type, username, email address, company name, country and the mobile number.

M-Pesa History

M-Pesa – M stands for Mobile while Pesa is a Swahili word for money.

M-Pesa was the first mobile money transfer that was launched in the world. It is owned by Safaricom, a Kenyan telecommunication company in 2007. Safaricom uses the STK menu whereby every SIM card in the market must have the M-Pesa menu.

M-Pesa was originally invented by a student who at the time was undertaking his project in the Jomo Kenyatta University of Agriculture and Technology (JKUAT). He presented his project to Safaricom and was awarded by the then Safaricom CEO, Michael Joseph.

The student did not spend much of his time investing in his idea and so Safaricom got full ownership of the technology. Controversy emerged later on who is the rightful owner behind the M-Pesa idea. However, Safaricom has full ownership legally and technically on the M-Pesa idea.

In May 2019, Safaricom and Vodacom (operator of M-Pesa services in Tanzania) announced plans to spend USD13.4 million to buy intellectual property rights from Vodafone. The deal will lead to significant savings in royalties paid to Vodafone and expand the service to new African markets.

M-Pesa Number of Customers

Since its introduction in 2007, M-Pesa has grown at a significant rate. By 2012, over 17 million M-Pesa accounts had been registered and 31 million accounts in 2018. There are over 5 million M-Pesa transactions every day. These transactions include topping up airtime, money transfers, withdrawals and M-Pesa to bank and vice versa deposits and withdrawals.

M-Pesa services are available to both Android and iPhone mobile phones. Alternatively, you can also use the mySafaricom App which is available to both iOS and Android. With the mySafaricom App, you can withdrawal money to your Kenya phone number, transfer money, top up airtime and pay for goods and services using Lipa na M-Pesa.

More M-Pesa Information

notes: source header image

Vincent is a writer and researcher with an interest in finance, banking, startups, and remittance. He holds a Bachelors degree in Applied Statistics with computing. He founded Nexin Startups, an online platform offering startup advice to investors and entrepreneurs. Read more about us and our authors.