The Impact of Mobile Payments on the Performance of Micro-businesses: a Case of Safaricom’s Lipa Na Mpesa Services in Machakos Town, Kenya

Abstract

Mobile technology in Kenya though recently introduced, is now widely utilized by most micro-businesses population making it popular amongst many banks. Mobile money services provide very important financial service required by many including those who do not typically use financial or banking services. The general objective of the study was to establish the impact of mobile payments service Lipa Na M-pesa on the performance of micro-businesses in Machakos Town, Kenya. The dependent variable was performance of micro-businesses whereas the independent variables were: Accessibility, Efficiency and Reliability, relatively low Cost and Time and Convenience. The study was led by three theories: Technology Acceptance Model Theory, Innovation Diffusion Theory and Task Technology Fit Theory. The descriptive survey design was adopted in this study. The population of the study were 50,000 merchants actively using Lipa na M-pesa in Kenya out of which 500 are based in Machakos town. A sample size of 300 merchants was targeted as respondents for the study. The information from the merchants was collected through questionnaires. Both closed ended and open-ended questions were included in the questionnaire. A total of 276 questionnaires were properly filled and returned. This represented an overall successful response rate of 92%.The study employed a descriptive research design and a multiple linear regression model was used to analyze the relationship between the variables. Statistical package for social sciences version 21 was used for data analysis purposes. The results of the study indicated that Efficiency and Reliability and business performance were positively and significantly related (r=0.635, p=0.000). The results further indicated that Time and Convenience and business performance were positively and significantly related (r=0.511, p=0.000). It was further established that Accessibility and performance of micro-businesses were positively and significantly related (r=0.759, p=0.000). Similarly, the results showed that relatively low Cost and performance of micro-businesses were positively and significantly related (r=0.637, p=0.000). Accessibility, Efficiency and Reliability, relatively low Cost, Time and Convenience of Lipa Na M-pesa services were found to be satisfactory variables in explaining business performance. This was supported by coefficient of determination also known as the R square of 72.2%. The study recommended that for enhanced utilization of the Lipa na M-pesa services, Safaricom Ltd should conduct more campaigns to demystify any hindrance towards the use of this service.