Kenya’s Been Educating The World On Mobile Money For 10 Years


A gutsy company in Kenya launched a mobile money initiative that would change the lives of millions of tens years ago on Tuesday. They named it as M-Pesa where “pesa” meaning is money in Swahili. After thinking of mobile money your mind will probably jump to NFC-powered payment services from Samsung, Google and Apple. M-Pesa predates all of those and launched before the smartphones they rely on. Kenyan carrier Safaricom enabled person-to-person mobile payments in the country via M-Pesa four months before Apple’s first generation iPhone went on sale in 2007.

M-Pesa is allowing people to store money in a secure digital account and transfer it using their phones, even letting them send funds abroad and also paying bills. Sanctioned agents will swap cash for electronic money and can do the same in reverse. The service is initially powered by text messages, although an app is also now available for the small number of smartphone users. The Western world is catching up, but we’re taking a lot of time. According to research firm Forrester, Mobile payments in Europe and the US still aren’t mainstream, with most people preferring physical charge cards or paper money but this is set to change.

By 2021 mobile payments will grow 23 percent in Europe and will have tripled in the US to $282.9 billion. Meanwhile, M-Pesa, is already used in 96 percent of households in Kenya. That’s the kind of market infiltration most tech companies can only dream of.

‘Helping the unbanked’

As impressive as those milestones and stats are, it’s the way M-Pesa has transformed people’s lives and created a startup ecosystem in Kenya that cemented the service’s reputation. It’s also what Joseph is most proud of. For many M-Pesa users, the service isn’t just a debit card equivalent, it’s their bank. Not long ago, banks and savings accounts were only for wealthy and middle-class Kenyans. In 2009, M-Pesa savings accounts were introduced and within three months 14 million accounts were set up.

Last year, an MIT study published the estimation that M-Pesa is responsible for lifting two percent of households in Kenya out of poverty. This is equivalent to 194,000 families who now no longer live below the poverty threshold on less than $1.25 per day.

‘Gaining trust and viral success’

Joseph, who has spent time examining the global mobile payments market as a World Bank Fellow says this bespoke approach requires the kind of patience that big multinational tech companies don’t often exhibit.

It’s not just patience, though. Joseph attributes the success of M-Pesa to many different factors — the culture of innovation within Safaricom, the Kenyan banking regulators and the country’s spirit of entrepreneurialism, to name a few. Joseph recognizes that global competitors like Apple, Google and Samsung are on their way, but he doesn’t seem too worried at this point.