How does mobile money get in and out of a cellphone?

Systems vary in detail, but Nairobi resident Mary Wanjiku uses M-PESA, the continent’s first such system set up by Kenyan mobile operator Safaricom, to send money to her mother in the countryside every month.

Here’s what happens:

• Mary and her mother go to their nearest M-PESA agents with their official IDs and cellphones to register themselves and their SIM cards on the system.

• Once she has activated her account, Mary charges up her account by giving the agent cash. The transaction and balance are confirmed via an SMS.

• Mary then transfers, via SMS, 3,000 Kenyan shillings ($38.40) to her mother’s mobile phone account. M-PESA charges her a flat fee of 30 shillings.

• Her mother receives the SMS and keeps it on her phone until the local M-PESA agent passes through her village. She then transfers that money to the agent’s phone via SMS, and the agent gives her the cash. Her mother is charged 45 shillings, a fee proportionate to the size of the withdrawal.

• Mary can also send money to friends who have not registered for M-PESA or who use a different phone network. In these cases, the fees at both ends of the transfer are higher.