Commercial Bank of Africa (CBA) has partnered with Safaricom to launch M-Shwari, a revolutionary mobile banking service that makes it possible for millions of Kenyans to save, earn interest and borrow money using their mobile phones.

The launch of this service has made big news all over the social, and antisocial, media. But is this service worth all the hype? Let's see.

We can all agree that opening an M-Shwari account is easy, convenient and fast. Better still, you get to open your account from the comfort of your mobile phone wherever whenever. All you need to be is a registered Safaricom subscriber, registered M-Pesa user and have an active Safaricom M-Pesa account/line/. As it is the norm, you should be of legal with identification documentation.

If you meet the above qualifications and you are interested in activating your line into the service, you begin by updating your menu to have an M-Shwari option. The process is simple:

• Go to the Safaricom menu on your phone
• Select: M-Pesa
• Go to: My account
• Select: Update Menu
• Enter your M-Pesa PIN

Wait to receive the updated M-Pesa menu.

Once your menu is updated, the next step is to activate your M-Shwari account. Again this is simple:

• Go to: M-Pesa menu
• Select: M-Shwari
• A message will appear requesting you to read and accept the Terms & Conditions
• After accepting the terms, an SMS will be sent informing you that you are now active on the M-Shwari service.

Once your account is active you can start depositing cash from your M-Pesa account to your M-Shwari account and with draw money from your M-Shwari account. You can do all of this from the M-Shwari option in the M-Pesa menu.

Transfer from M-Pesa to M-Shwari

• Go to: M-Pesa menu and select M-Shwari
• Select: Send to bank
• Enter PIN
• Confirm the message displayed “Send money to bank KES XXXX”

You will receive a confirmation message showing the nature of transaction, time, M-Pesa balance and M-Shwari balance.

Withdraw from M-Shwari Account

• Go to: M-Pesa menu and select M-Shwari
• Select: Withdraw from bank
• ENTER Amount
• Enter PIN
• Confirm details

Wait for a confirmation SMS.

To the more serious stuff, transaction charges and interest rates.

The service has no ledger fees. You get to deposit cash into your M-Shwari account, via M-Pesa at no charge and withdraw from your account at no charge. Fee you will incur is a 7.5 percent facilitation fee when taking a loan with the service. We will get to that a little bit later.

You will be paid interest on your savings balance. Interest will be calculated daily but paid out at the end of each calendar quarter.

Savings amount interest P/A is as follows:

• KES 1 to KES 10,000: 2%
• KES 10,001 to KES 20,000: 3%
• KES 20,001 to KES 50,000: 4%
• Amount above KES 50,001: 5%

M-Shwari has loan facilities that lets you borrow from as low as KES 100, maximum amount will depend on exactly how you qualify for the loan. In order to qualify for a loan you will have to be an active M-Pesa user for at least 6 months , save regularly on M-Shwari account and continuously use other Safaricom services such as Voice, DATA and M-Pesa.

To check how much you are eligible to borrow, dial *234*6#. To request for a loan:

• From M-Shwari menu, select Loan
• Select Request Loan
• Enter amount
• Enter PIN
• Confirm the message displayed

An initial SMS will be sent immediately on confirmation of request for loan, A second SMS message will be sent on successful or unsuccessful request.

Loans don’t attract any interest. Weel, except for a 7.5 percent "loan facilitation fee" that is payable only once for each loan taken.

When you borrow KES 2,000, for instance, you will incur a facilitation fee of KES 150 (7.5% of the borrowed amount).

Loans have a repayment period of 30 days. If you fail to pay with the 30 days an equivalent amount borrowed including facilitation fee will be frozen.

If you borrowed KES 2,000, and you KES 5,000 in your M-Shwari account but fail to repay the amount within 30 days, KES 2,150 (KES 150 is the facilitation fee) will be frozen from the KES 5,000 available in your M-Shwari account. You will, however, be able to access any balance above the frozen amount. The frozen amount will be accessible once the loan has been repaid. You will also be able to deposit cash into your M-Shwari account plus you will continue earning interest on the amount you have in your account.

It’s also important to note that if you fail to pay the loan within 30 days, the loan repayment period will be extended for an additional 30 days and you will be charged an additional 7.5 percent facilitation fee on your outstanding balance.

To repay the loan:

• From M-shwari menu, select Loan
• Select: Pay Loan
• Enter Amount
• Enter PIN
• Confirm the message displayed.

You will receive a confirmation SMS.

For the first loan you will be eligible to take, you should have deposited money into your account. the amount you can borrow will be based on your usage of Safaricom Voice and DATE as well as M-Pesa usage.

Early loan repayments will increase your future loan qualification. Remember, your loan limit is dependent on your previous loan repayment behavior and usage of other Safaricom services.

You will be able withdraw cash from your nearest M-Pesa agent and you can access a mini statement of you M-Shwari transactions conveniently via SMS.

That's a lot of data, huh?

M-Shwari is probably the next big thing. Convenience of paperless, safe and fast service can’t go unnoticed. The service will help nature a saving culture given the competitive interest calculated daily and paid out at the end of each calendar quarter. Lack of ledger fees, withdrawal and deposit charges makes the service affordable.