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Yesterday we heard about the growing use of smartphones for banking in the U.S. Today, to another place where millions of people pullout cell phones to make financial transactions: Kenya. They pay bills, buy goods and send money to family members.

As NPR's Frank Langfitt reports, Kenya's mobile money revolution is helping poor people and boosting local economies.

(Soundbite of conversations)

FRANK LANGFITT: Saimon Outiri works as a cook in a restaurant in Kibera. It's a sprawling, crowded community in Nairobi and one of Africa's largest slums. It's also full of energy. People work on the dirt streets, pounding doorframes together.

(Soundbite of children)

LANGFITT: Kids boot soccer balls.

Like most people here, Saimon Outiri doesn't earn very much, just $4.37 a week. Outiri would like to put that money in a bank, but he can't afford to.

Mr. SAIMON OUTIRI (Cook): If I want to open up a bank account, it cost me some charges, which I am unable to incur.

LANGFITT: So this afternoon, Outiri is depositing his salary onto his cell phone with the help of an M-PESA agent in a kiosk in Kibera. M-PESA is the first mobile money transfer system of its kind in Africa. M stands for mobile, pesa means money in Kiswahili.

Outiri uses the service for all kinds of things.

Mr. OUTIRI: Sometimes I can use the M-PESA may be to pay for rent.

LANGFITT: In addition to paying his landlord, he sends money, e-cash, as it's called, to the cell phone of his mother, who lives 600 miles away. She withdraws the money at an M-PESA kiosk there. Then she uses it to buy staples like salt and sugar.

Outiri says M-PESA also provides security. He'd rather store money on his cell phone than carry cash in Kibera, a place so dicey some businessmen collect payments surrounded by guards with AK-47s. Mugging is a constant worry.

Mr. OUTIRI: Theres robbing, theres pick-pocketing.

LANGFITT: Safaricom, Kenyas leading mobile phone company, launched M-PESA several years ago. Originally, the service was just a marketing tool. The company was targeting people without bank accounts, the vast majority of Kenyans, to get them to subscribe to Safaricom.

But Waceke Mbugua, M-PESAs marketing manager, says the service proved surprisingly popular and useful.

Mr. WACEKE MBUGUA (Marketing Manager, M-PESA): It is growing faster than we expected it to grow.

LANGFITT: After less than four years, M-PESA now has more than 13 million users and 23,000 agents. Transferring money to a person anywhere in Kenya costs about 37 cents. Paying a bill - free.

The University of Marylands Iris Center, which does economic research, interviewed 300 M-PESA users, agents and community leaders last year. Sherri Haas co-authored the study. She says the M-PESA is clearly having an economic impact. For instance, she says the flood of money transfers from urban areas boosted consumer spending in the countryside.

Ms. SHERRI HAAS (University of Maryland): Now that locals were able to receive money into these areas, they were spending their money there, as well. Shop owners would report that they had more business because there was more money circulating within these local communities.

LANGFITT: M-PESA also allows some small business owners to increase their speed and expand their reach.

Ms. PAMELA OMIYO: Im Pamela Omiyo. Im a designer by profession.

LANGFITT: Omiyo runs an open-air dress shop in Kibera. She says her business has tripled in the past several years. Omiyo says much of the reason is M-PESA. It used to take days for her to send and receive payments for fabric and dresses. Now, its instantaneous. She scrolls through her phone to demonstrate.

Ms. OMIYO: See all these messages. M-PESA, M-PESA, M-PESA, M-PESA, all.

LANGFITT: Tell me what each one is?

Ms. OMIYO: This is 5,000.

LANGFITT: Ama Uduno(ph).

Ms. OMIYO: Ama Uduno is in Kimsuno(ph).

LANGFITT: And why did she pay you 5,000?

Ms. OMIYO: Because she wants her fabric. Im packing them now, you see? It's there on the table.

LANGFITT: Her dresses?

Ms. OMIYO: Yeah, her dresses.

LANGFITT: Omiyo even uses the service to pay her workers. In recent months, M-PESA has encountered new competition from other mobile phone companies, but it still dominates the Kenyan market. And its expanded on the continent and beyond, to South Africa and Tanzania, even Fiji.

Frank Langfitt, NPR News, Nairobi.

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