Household Choice Of Mobile Money Transfer Service Providers: Case Of Nairobi County, Kenya.
Njuguna, Mbugua John
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The adoption and use of mobile money have become widespread particularly among the poor and the unbanked society. Besides reducing the costs of communication and improving access to information, mobile phones are an enabling technology for other innovations. One important example is mobile money transfers services, which could be very relevant for the rural poor, who are often under-served by the formal banking system. As a valued addition service (VAS), Mobile Money Transfer Services (MMTS) has proven to be a critical component in poverty reduction in Africa in general and Kenya in particular. Access to basic financial services through mobile money could enhance the ability of rural households to invest in their livelihoods and improve welfare. Kenya is a home to six service providers of mobile money making her a global leader in usage of mobile money transfer services. Various researches conducted in Kenya reveal that despite leading in usage of mobile money, users are faced with myriad of challenges such as prohibitive costs on small transactions, network outages and users are not able to switch easily from one dominant service provider to others. The main objective of the study was to assess mobile money transfer services market in Kenya using a case study of Nairobi County. To achieve this objective, the study adopted non-experimental research design since the information required could not be manipulated. The study made use of both the secondary and primary data. Primary data was obtained through structured questionnaires from 209 respondents. The data obtained was analyzed using both logistic and multinomial logit regression models to achieve objective one and two respectively. The study issued a total of 250 questionnaires and a total of 209 were successfully and adequately filled and returned which translates to 83.6 percent. The results of the study indicated that M-pesa is the most popular MMTS followed by Airtel money, Equitel money, Orange money, Mobi-kash and Yu cash. Expressed as percentages, the awareness of MMTS translates to 97.1, 59.1 52.9 33.7, 17.3 and 7.7 respectively. The results on the marginal effect indicated that the variables Age, Education level, income, cost of transaction of MMTS and cost of transaction of alternatives to MMTS were significant at 5 percent level. However, Gender, ease of accessibility, convenience and number of mobile phones were not significant at 5 percent level of significance. Multinomial Logit regression marginal effect model for the factors that influence the choice of mobile money transfer service (MMTS) providers in Nairobi County indicated that ease of access, cost of transaction and convenience was significant in all the three models estimated representing the three service providers with one dominant service provider being the reference category. Variables Age, number of mobile phones and gender were not significant all along in determining the choice of MMTS service provider across the different service providers. Based on key findings, this study recommends increase in the number of money agents outlets by each service provider with smaller market shares to ease access, aggressive advertising to raise awareness of the existence of specific mobile money service providers and to take high consideration before making any transaction costs reviews as households were found to be highly responsive to transaction costs.