Safaricom Mpesa's Evolution and Challenges

M-PESA M -pesa is a money transfer service wherein users can use their mobile phones to store and transfer money. I t was developed in 2005 but launched in 2007 after the regulators had conducted the required due diligence.  The due diligence involved: 1.procuring legal opinion to the effect that Safaricom was not engaged in banking business 2. Ascertaining the system's security mechanisms and 3. Providing for minimum standards . Safaricom operates under special license from CBK whose conditions are more relaxed compared to those of banks and other financial institutions. F  Concerns that this is a huge gamble which would have a catastrophic effects in the event of the systems collapse. M pesa can be said to be riding in bubbles because customers are fully exposed to endemic occurrence of bubbles and crashes in financial markets.

Security of mpesa transactions is at major risk- since cases of imersofication has been reported of late..  Regulatory challenges of M-Pesa The process idled by non-bank organizations,outside the scope of financial regulations.  Being new concept,the regulators have very limited precedence to draw upon. The mobile platforms cut accross various sectors and none of the regulations are conversant with all the operational aspects. M -pesa is a unique innovation that is rapidly evolving. Laws must be flexible in order to accommodate new changes. Insufficient expertise to craft the necessary legislation and lack of global best practice. The need for a level playing ground has been an issue e.g fight between Airtel and safaricom. 

There is lack of consumer protection mechanisms M -pesa can be termed as financial innovations in financial viewed M -pesa formal financial service. M -pesa is a formal financial service since its regulated by laws. The central bank of kenya act as amended in 2003 gives cbk broad oversight mandate over payment systems,but does not provide for operational modalities. 

This makes M -pesa to be a financial service formal . This is outlined in the below: CBK 's agency guidelines issued in 2011 Kenya information and communication  Act Consumer protection law. Capital markets authority CBK has also continued to exercise broader oversight over the stability of payments systems across the economy since laxity can lead to unnecessary complications when innovations grow into complex systems and become too complicated to regulate.