The paper explores the impact of reduced transaction costs on risk sharing by examining the effect of mobile money, specifically Kenya's "M-PESA," on household consumption. Over a two-year period, the adoption of M-PESA increased from 43% to 70% of households, while the number of cash-in and cash-out agents grew fourfold. Using panel data, the authors find that while shocks reduce per capita consumption by 7% for non-users, the consumption of households with access to M-PESA is unaffected. The mechanism behind this effect is an increase in the number, size, and diversity of remittances received. A falsification test using data before the innovation supports these results. The study emphasizes the role of transaction costs in incomplete insurance and shows that M-PESA users are more likely to receive remittances, which helps smooth consumption in the face of negative shocks. The findings highlight the importance of reducing transaction costs in improving risk sharing and financial inclusion in developing countries.The paper explores the impact of reduced transaction costs on risk sharing by examining the effect of mobile money, specifically Kenya's "M-PESA," on household consumption. Over a two-year period, the adoption of M-PESA increased from 43% to 70% of households, while the number of cash-in and cash-out agents grew fourfold. Using panel data, the authors find that while shocks reduce per capita consumption by 7% for non-users, the consumption of households with access to M-PESA is unaffected. The mechanism behind this effect is an increase in the number, size, and diversity of remittances received. A falsification test using data before the innovation supports these results. The study emphasizes the role of transaction costs in incomplete insurance and shows that M-PESA users are more likely to receive remittances, which helps smooth consumption in the face of negative shocks. The findings highlight the importance of reducing transaction costs in improving risk sharing and financial inclusion in developing countries.