In 2005, Safaricom, the leading Kenyan mobile network operator, launched a mobile phone-based payment service called M-PESA. Utilizing simple SMS technology on Safaricom’s data network, M- PESA is cheaper, faster and more secure than the previously existing alternatives. Based on an already existing mobile network, M-PESA grew rapidly to register almost 6 million users by March 2009, with an average of 7 million transfers per month. By comparison, the country’s formal banks only have 750 banking outlets and 3,000,000 bank accounts countrywide. For a country with limited access to electronic banking and extensive need for cash transfers from urban to rural, M-PESA has filled a great need and greatly reduced the costs and risks of money transfers for ordinary Kenyans. M-PESA’s chief contribution is to reduce the problem of cash management for ordinary Kenyans. However, as this paper demonstrates, the problem has been shifted onto third-party agents. While this is a more efficient solution than what previously existed, it is still sub-optimal. Rural agents in particular are forced to go to the bank to restock cash far too frequently. Using the Economic Order Quantity (EOQ) model, this paper suggests three solutions that would better optimize M-PESA cash management. The first is for Safaricom to loan agents money so they can operate more efficiently. The second is to reduce the costs and risk of refilling inventory. Finally, the third is to look for partnerships with companies that have to bring cash from the rural areas back to the city, contracting with them to deliver excess cash from their retail points to M- PESA agents who need cash in exchange for virtual transfers plus additional incentives. Coca-Cola is the obvious candidate for this third solution, since they have a well-established distribution network in rural Kenya. In sum, although M-PESA has greatly improved payment and cash transfers in Kenya, it has not eliminated the fundamental problem of managing and transferring cash inventory from places that have surplus to places with deficit.