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Abstract:
Micro and Small Enterprises (MSEs) in Kenyan informal sector are increasingly using mobile phones for business transaction particularly, M-Pesa which offer various services such as savings, payments, receiving and sending money. The aim of this study was to determine the effect of M-pesa services on the unit prices of products of Mess It is acknowledged that MSEs are contributing a lot to the Kenyan economy, yet it is not established whether the usage of M-pesa services has any significant effect on the unit prices of MSEs' products in the informal sector. The mobile phone is the most widely used Information and Communication Technology tool in the informal economy. However, studies done on the role of mobile phones among the MSEs in the informal sector tend to concentrate on communication services rather than monetary services. This study attempted to address this knowledge gap. Cross-sectional survey research design and line transect sampling method was used to identify the 384 respondents from 8 sub-counties of Nairobi County. The linear regression model was used to estimate the results. The findings of the study show that the usage of M-Peas services, proper record keeping, and age of the owner manager have significant effect on the unit cost of the fast moving products of Mess On the other hand, education level was found to have a significant influence on the unit cost of the slow moving products. The study results show that the location of the MSEs does not have an influence on the unit price of products. Based on the cost benefit analysis, the research recommends the use M-Megaservices even if those services increase the unit cost of the fast moving product because their benefits such as security and convenience far outweigh the costs. MSEs should be trained on how to utilize the various M-Peas services for business transactions in the informal economy.
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