An Analysis of Household Choice of Mobile Money Transfer Services in Nairobi County, Kenya

Abstract

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 objective of this study was to investigate the household choice of Mobile Money Transfer Services over alternatives of mobile money transfer in Nairobi County. 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. 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% level. The findings revealed that an increase in age, education level or income by one unit would lead to a decrease in the probability that an individual chooses the alternative of MMTS and is more likely to choose MMTS services by 0.011, 0.112 and 0.230 respectively.