1. INTRODUCTION1.1 How M-PESA Works
M-Pesa is Safaricom's low cost money transfer service that enables users to send and receivemoney through their mobile phones. M-PESA allows users an affordable, fast, convenient, and safeway to transfer money through mobile phones anywhere in Kenya. Through M-PESA users are ableto deposit and withdraw money, send money to another M-PESA customer.The service works on new generation SIM cards with a SIM Application Tool Kit (STK). For usersto access this service, all they have to do is register at any authorized M-PESA agent for free, byproviding them with their Safaricom mobile number and their national Identification Card and onceregistered, customers are given an M-PESA enabled SIM card, which will allow them to put moneyinto their account by depositing cash with an authorized agent.It is of importance to note that the M-PESA Application is a SIM initiated application since the itresides within the SIM Card. Authentication Information also resides within the SIM and ischecked against the Home Location Register (HLR) - database at the Service Provider which storesdata about GSM subscribers, including the Individual Subscriber Authentication Key (Ki) for eachSubscriber Identity Module (SIM).M-Pesa users are be able to withdraw cash after receiving an SMS, informing them of thetransaction. Users can deposit their money with authorized agents and withdraw from the sameagents. Users are be allowed a maximum of Kshs 35,000 and a minimum of Kshs 100 for eachtransaction.
Fig 1.1: Cash withdrawal process for M-PESA