It may shock you to learn that Kenya is far ahead of the United States in the use of mobile wallet technology.
How did an economic and technological superpower like the United States of America get pwned in this category of technology by an East African nation with a small population and limited technological development?
I've been visiting Kenya for two months. As I walk around Nairobi, Kenya, I'm constantly stunned to see everybody paying for stuff with phones.
M-Pesa is a mobile wallet service provided by the Kenya-based companies Safaricom and its minority partner Vodacom. The system enables any subscriber with a mobile phone to deposit, withdraw and pay for things with that phone.
The key attribute of the M-Pesa system is simplicity. Money is stored in an M-Pesa account, rather than deposited in a bank. And it's transferred via SMS. So users give their cash to an authorized M-Pesa location, and that money appears in their online account. Then, when they want to buy food, pay back loans, send money to family members or pay their bills, they just sent the money by texting it.
The supporting infrastructure of the M-Pesa system is made up of tiny stores that enable people to make deposits into their M-Pesa accounts with cash.
The system is so useful and popular that it's spreading to Tanzania, Afghanistan, South Africa, India and Egypt.
It's estimated that about half the world's mobile wallet transactions take place through M-Pesa. Kenya is the world's number-one mobile wallet powerhouse, and it's exporting that service abroad.
So why is one of our first-world problems that we're still stuck in the credit card era?
The mobile phone is an obvious place to put your digital money. The reason is that it's a computer. It's connected to the Internet. And everybody's got one.
So where's my mobile wallet?
After looking at this problem in detail, I've come to the conclusion that the reason we in the US aren't using our phones to pay for everything is that it's unnecessary. Some people want the technology, sort of. But why?
Well, we just like the idea of it. We'd like to carry fewer credit cards. Beyond that, we really don't have good reasons to switch from credit cards to mobile phone payments.
To understand how unnecessary mobile wallet technology is to American consumers, it helps to understand how necessary it is to Kenyans.
In a nutshell, mobile wallets replace cash in Kenya for most consumers, whereas in our own country it would replace credit cards, mostly.
Some 85% of the world's transactions are still done in cash, according to MasterCard CFO Martina Hund-Mejean. And that can be a problem. Cash can't be transferred over distances remotely. And it can be easily stolen.
M-Pesa relies on a huge number of local retail stores that convert cash to M-Pesa account deposits. And Safaricom must make sure these small outlets make profits on the deposits, otherwise they wouldn't have an incentive to offer that service.