Economics Today 18th Edition by Roger LeRoy Miller

Exercise 1

In Kenya, Mobile-Phone Airtime Is Money
Bob Collymore is the chief executive officer of a company called Safaricom, the top provider of mobile-phone services in the African nation of Kenya. Safaricom also operates a mobile-phone payments system called M-Pesa, which customers can use to make payments denominated in the national currency, the shilling. Alternatively, customers can employ a different means of payment: prepaid mobile-phone usage minutes called "airtime." If a customer has unused minutes of airtime that she prefers to exchange for an item sold online, she can arrange a purchase of that item at a price expressed in terms of airtime minutes. Because so many consumers now use both forms of payment when shopping online with their mobile phones, sellers usually display prices both in units of shilling and in minutes of airtime. Thus, the M-Pesa system offers Kenyan mobile-phone users the ability to use two different means of payment: shillings or airtime.
Collymore has a problem. The M-Pesa system has become so popular that expanded usage of Safaricom's mobile-phone network has strained its capability of handling the increased flows of transactions. The network occasionally has become overloaded, and Safaricom's employees have experienced difficulties in rerouting transmissions to prevent break-downs. The company is already in the process of upgrading its network capacity, but Collymore has decided to conduct routine upgrades thereaf-ter to help the firm keep up with growing M-Pesa usage.
What is one key function of money performed by airtime minutes? Explain.