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Sunday, March 24, 2013

Mpesa System hacked


The person who invented money transfer system was genius though I doubt if he was corporate minded or even if he was rewarded for his genius idea though.

Most geniuses don't end anywhere.

They invent and corporate minds rob them of those ideas and you won’t hear their names anywhere. That’s how bad men can be, they wait until you do the hard part then they come in and label you a competitor but don’t worry about it keep inventing you are the best gift the world can ever have. They are nothing without you so boost your morale and keep on. They are bags full of scam, fox in sheep skin.

The money transfer system revolves around the following;
1.  client
2.  agent
3.  super agent
4.  the service provider

Now the client here is you, the agent is the person in that outlet shop in your estate labeled Mpesa agent, zap money, iko pesa or any other funny name resembling such names. The super agent is that shop in your town center where you can buy floats, super agents can also register agents. The service provider is your mobile phone network hosting and managing all the services.

To be an agent there are requirements you are suppose to fulfill and that goes for super agent and the same applies if you want to be a service provider.

Today I will only cover the agent and the client because they are the backbone of mobile money transfer.

To be an agent you need to open a mobile money account with the service provider and make deposit of certain amount of cash depending on the rules provided by the service provider. This deposit is known as float, float allows an agent to receive cash from clients. Without float an agent cannot receive any cash from the client.

Why? Let’s find out.

To be a client you need to register your mobile phone line with any service provider offering mobile money transfer to enjoy this service. Once your line is registered a mobile money account is opened for you.

When you walk into any mobile money agent premises and either want to deposit cash into your mobile money account or withdraw cash from your mobile money account this is what happens.

1.  When you make a deposit of let’s say ksh500, the money is directly deposited into your mobile money account and a confirmation message is sent to your phone almost immediately as a receipt for the transaction.

Now you ask why any service provider would trust that the money you have just deposited into your mobile money account through an agent somewhere in that remote village goes into their mobile money account? Good question.

Before I got this answer I keep asking myself many questions about the whole mobile money transfer thing but guess what I found out. One day I walked in to deposit some cash into my mobile money account but couldn’t because the agent didn’t have enough float. Float? Yes, not enough float.

Every agent has a phone just as you as a client too have a phone. Now the agent’s phone is used to make requests to the service provider database for processing of any transaction.

When a request is sent by the agent for deposit, the system checks whether the agent making request has enough float into his/her mobile money account to allow for the transaction.

If the agent’s float is less than the amount requested for deposit the system will reject the whole transaction thus no transaction will occur and the service provider will be covered from any loss.

If the system finds that the agent has enough float the request will be processed and the amount requested for deposit credited into the clients mobile money account and deducted from the agents mobile money account (float) and a confirmation message sent to your phone as a receipt.

Example: if the agent’s float say is KES1000 and you deposited KES500 with the given agent. The agent float will be reduced by the similar amount and your mobile money account as a client increased with the similar amount. So the agents float should be reduced by KES500.

Note that when you deposit cash into your mobile money account you are not charged anything.

2.  When you as a client present yourself to an agent to withdraw cash from your mobile money account, the agent will send the request and the system will process the request even if the agent doesn’t have enough float equaling the amount requested.


The answer is, if you as a client have cash equaling your request then, the money will be deducted from your mobile money account and credited into the agents mobile money account plus all applicable taxes.

Note that when you withdraw cash from your mobile money account you are charged.

Simplified version

1.  When a customer withdraws cash from his/her mobile money account the mobile money service provider deducts the amount withdrawn plus the SERVICE charges from the customers mobile money account and credits the cash into its agent’s mobile money account.

2.  When a customer deposits cash to his/her mobile money account the mobile money service provider credits the amount deposited into the customers mobile money account and then deducts the amount deposited from the agent’s mobile money account.

This process makes sure that an agent cannot receive any cash from a customer if the agent's account does not have sufficient amount equal to the cash to be deposited and so mpesa, iko pesa, airtel money or any other mobile money service providers operates on agent’s money.

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