VOICES Voices Icon Ideas and Insight From Explorers


The Invisible Bank: How Kenya Has Beaten the World in Mobile Money

Click a few keys, exchange a few numbers, and it’s done. With just a mobile phone and a registration with Safaricom, Kenya’s mobile service giant, you can pay for anything in seconds – no cash, no long journeys to towns to reach a bank, and no long lines when you get there. This is m-Pesa, the revolutionary approach to banking which is changing economies across Africa. The service allows customers and businesses to pay for anything without needing cash, a bank account, or even a permanent address. In today’s Digital Diversity, in honour of its recent fifth birthday, we present a beginner’s guide to m-Pesa and examine its implications for financial access in developing economies.

Digital Diversity is a series of blog posts from kiwanja.net about the way mobile phones and other appropriate technologies are being used throughout the world to improve, enrich, and empower billions of lives.

By Olivia O’Sullivan

In the developed world, we are used to the idea that we created the model of industrial and economic progress which other countries must follow. Many of our big ideas about development rest on the assumption that the West cracked the formula for economic progress sometime in the 19th century, and what we need now is for the developing world to ‘catch up’. Even the language we use encapsulates this idea, in the division between ‘developed’ and ‘developing’. But new innovations are challenging the idea that development requires handing ideas down from developed to developing. In banking and finance, the big ideas in cashless transfers and mobile, flexible exchanges are not to be found in Geneva or London or New York. A revolution in mobile money transfer has occurred, but not in these financial centres. Instead, it’s happened in Kenya, with m-Pesa.

The service was developed between Safaricom and Vodafone, and launched in 2007. And it’s not just something used in cities or by big commercial interests. By 2010, over 50% of Kenya’s population had used it – this means rural villagers haggling over produce, then using their Nokias to make the final deal. It means Masai herdsmen bringing their phones to market along with their cattle, ready to stock up on essentials to bring back to their homes.


The widespread use of mobile phones in Africa provides huge potential for innovation. (Photo: kiwanja.net)


For people who live in isolated areas, the service means no longer having to carry lots of cash to markets or towns, risking losing huge amounts to banditry and theft. For people without permanent addresses or bank accounts, the service means they can pay what cash they have to m-Pesa in exchange for mobile credit, making payments and transfers and building up savings – becoming participants in an economy from which they had previously been locked out. For migrants, the service allows them to send money home to their families and villages safely and simply. Safaricom’s international money transfer service uses a similar system for international immigrants, coordinating great webs of remittances and payments across the world. For Kenyan businesses, the service means payments for stock or repairs can happen almost instantaneously, wiping out the need to rely on bank clearances and flawed infrastructure which had clogged the economy with inefficiencies and delays.

So how does it work? m-Pesa relies on a network of small shop-front retailers, who register to be m-Pesa agents. Customers come to these retailers and pay them cash in exchange for loading virtual credit onto their phone, known as e-float. E-float can be swapped and transferred between mobile users with a simple text message and a system of codes. The recipient of e-float takes her mobile phone into her nearest retailer when she wants to cash in, and swaps her text message code back for physical money. There are already more m-Pesa agents in Kenya than there are bank branches.


An mPesa agent. (Photo: Laxman Rajagopalan)


Such a system also requires intermediaries, to get the cash to m-Pesa agents, and ensure cash movement keeps up with e-float exchanges. In this way, the system has created new jobs, with some intermediaries and retailers earning $1000 a month in commission from m-Pesa transactions.

As of m-Pesa’s fifth birthday – March 6 2012 – it had been used by a staggering 15 million people. The system was employed by the ‘Kenyans for Kenya’ campaign to raise money for Kenyans suffering from the Horn of Africa drought – just one way in which it has contributed to independence and innovation in Kenya’s economy.

In response to m-Pesa’s success, the model has been imitated in other countries. Africa’s biggest mobile operator MTN has rolled out schemes elsewhere, the most ambitious in Kenya’s neighbour Uganda. Central banks in some countries, such as Brazil, have now created financial inclusion teams, with a vision for using similar systems to bring financial access to the poor and isolated. The Indian government has also shown determination to achieve this aim, and analysts predict, with its strong IT infrastructure and dense population, India too could be on the road to becoming a cash-light, financially inclusive economy in the near future.


m-Pesa is a triumph of thinking locally but dreaming big. (Photo: kiwanja.net)


m-Pesa has big things to say about the future of African economies. It demonstrates the potential in the huge and rapid dissemination of mobile phones and other flexible, adaptable technologies on the continent. But it also shows the value of dreaming big but thinking locally. M-Pesa is not an attempt to recreate developed countries’ banking systems in Africa. Instead, it’s an idea which has been tailored to the Kenyan environment. Rather than giving up on poor, isolated communities as unbankable, it has extended financial services to their most apparently unlikely customers. Rather than giving up on sophisticated economic transactions in countries with poor infrastructure, it has found a way to circumvent that infrastructure, creating a virtual, mobile one of its own.


Olivia O’Sullivan has worked for the Guardian newspaper, the Sudan team of the UN Peacekeeping Department and with the London NGO Waging Peace. She is an MPhil in International Relations at Cambridge University. She previously studied History at Cambridge University and Diplomacy and World Affairs at Occidental College, California. She is currently the Research and Media Assistant for kiwanja.net/FrontlineSMS.

Digital Diversity is produced by Ken Banks, innovator, mentor, anthropologist, National Geographic Emerging Explorer and Founder of kiwanja.net / FrontlineSMS. He shares exciting stories in “Digital Diversity” about how mobile phones and appropriate technologies are being used throughout the world to improve, enrich, and empower billions of lives.

You can read all the posts in this series, visit his website, or follow him on Twitter.


  1. […] P2P payment service enables a user to send money to someone just using their mobile numbers. The key differentiator is that we don’t need any other financial information like account number, IFSC code and so. Though P2P payment services are in early stages, number of startups is already disrupting the market. ICICI and HDFC banks also partnered with M-Pesa and Chillr respectively for P2P payments. OxigenWallet and Instamojo are some notable players in this area. Kenya based M-Pesa is the best example for potential that P2P payments hold in the developing world. […]

  2. faith k
    April 27, 2016, 7:11 am

    Thanks for your article, and for highlighting the gains by Pmesa but to all Africans out there. No day or time wazungu (white man) will appreciate the fact that a great idea can come out of Africa. Mpesa may have been developed by vadofone or whatever but the idea is Kenyan. For once give credit where its due.

  3. Latest Mobile Phones In Kenya | mbwmobile
    October 22, 2014, 4:27 am

    […] The Invisible Bank: How Kenya Has Beaten the World in … – Jul 04, 2012 · Click a few keys, exchange a few numbers, and it’s done. With just a mobile phone and a registration with Safaricom, Kenya’s mobile …… […]

  4. Riaga
    toronto canada
    July 20, 2014, 7:51 pm

    nice article, Shocking reviews especially from people residing in uk and euro and USA. how could u display your naivety by the notion that nothing noble and astute innovation wise is expected of Kenyans first in this revolution of mobile money it was purely a Kenyan idea that accidentally brought out the M-pesa system not uk gov funded project by vodafom or signet non of that. The poor Kenyans wanted to get prepaid minutes from their brothers sisters, and sons and daughters with jobs in Nairobi and other cities so Safaricom not vodafom which was kenyan gorverment owned before they sold 30% share to vodafon. Kenyan gov allowed the swapping of minutes between phones nick named ‘sambaza’ via text, the volume of minutes was so much changing handsets person to person and some customers started selling them out in term of loans and interest to neighbours and friends with low phone credits which brought about the idea of money instead of phone minutes so the regulator which was the Kenyan gov which owned majority share till present in Safaricom authorized money transfers through phones via text. privatizing ICT in order to get loans was a must for safaricom. vodafon bought 30% of the 60% shares sold through IPO 30% to kenyan public and Vodafone was given the tender for the software and IT over site as single private majority share holder thats why safaricom IPA is situated in vodafone site in Germany. so no genius sitting in Europe or Uk thought about mpesa and innovated it, its a product of the need of the Kenyan people organic by nature and spirit of family sharing and social values of Kenyan people will not work any where else in the world extensively and massively as it has in Kenya unless the habits of that nation is about generosity and giving, its called culture and then u can commercialize it. clearly its not a prototype where big corparations own and control everything eg, Geneva or London or New York.

  5. James mwangi wanjohi
    March 31, 2013, 7:40 am

    Mpesa is the quickest and the safest means of money transfer but I know card companies feel threatened by this innovation. This reason many countries are down playing the whole idea of Mpesa.

  6. KingofthePaupers
    Brantford, Canada
    March 15, 2013, 2:36 pm

    Jct: How come they can pay their bills exchanging their cell-phone credits and we can’t use our cell-phone credits too but are forced to pay interest on borrowed bank money to do the same ? Har har har. It’s because they are destitute and we still have collateral to be foreclosed! Think about it! Phone credits trading software works in Africa but not in other high-tech countries. Har har har. All we have to do is get our phone companies to let us text-trade our minutes and we can too and no company in phone company in the “developed” world wants to adopt this great liberation development. Great news for Africa. Great news for the rest of the world if we can copy their genius.

  7. […] not America or China, but Kenya, where even if you don’t have a permanent postal address you can use services like m-Pesa(a contraction of the Swahili phrase for “mobile money”) to pay securely for anything in moments […]

  8. […] The Invisible Bank:How Kenya Has Beaten the World in Mobile Money […]

  9. K.B.I.M (@KBIM3)
    February 13, 2013, 1:51 pm

    It always amazes me how the “developed” world always wants to take credit for things they didn’t come up with.
    Social networking was already being done by Kenyan in 1999 Mashada,com was Kenya’s social network site. Now, they want to claim M-Pesa..so, why doesn’t the developed world implement it if they came up with it? smh

  10. […] money to, with 9.2 percent cost compared to the approximate average of 12% of African countries. Kenya’s mobile money (even though it’s not the first one to initiate it) undoubtedly contributes to its lower price in […]

  11. […] has bridged the gap with m-Pesa, a mobile payment service that achieved 250,000 subscribers in its first year and is now the […]

  12. Mustafa Giledi
    Tripoli - Libya
    January 28, 2013, 6:42 pm

    i see that there is a debate about who developed the system, whether it was Kenya and Kenyans or Vodaphone or Sagentia or IBM..i think the success of M-pesa is basically attributed to the entrepreneurial talent that was behind identifying the local needs and existing gaps and broadly knowing the right solution for it, once that is realized then i think you can find hundreds if not thousands of software developers who can actually take it on from there to put it into reality

  13. NN
    Mumbai, India
    January 7, 2013, 5:35 am

    Errrata :

    In my Post, please read the word “funcs” as “Funds”.

  14. NN
    Mumbai, India
    January 7, 2013, 5:34 am

    A very novel and by now, time tested mechanism of funds transfer on the Go! With Mobile Payment technology fast catching up in India, it will be real boost to the common man and to the economy alike. Not far away, the now “taken for granted” Card Industry needs to look at new collaborations to compete….???!!!

  15. Robert Muita
    nairobi, kenya
    December 24, 2012, 6:42 am

    @realitycheck, Mpesa was developed by kenyans, period. The fellas who did the actual coding/sripting were kenyans. Are you aware that a around the year 2001, a young kenyan wrote a business proposal of a social media site and actually registered a domain name of that site, but it got down by over 4 internet service providers because they considered it crazy and couldn’t work, and that was many years before Zukerberg thought of facebook, I know it because i have in possesion the original payment receipts of the domain name and business plan….just makes me wonder who needs to catch up

  16. Andrew
    December 23, 2012, 6:37 am

    @Realitycheck et al,
    The reason this is innovative is that it has not been replicated elsewhere in the developed countries and there is nothing similar or SIMPLER in the developed world.
    A simple example.
    If I’m in a pub in newYork or wherever, I either have to carry cash or a credit card. You can do the same in Kenya.
    In Kenya though, you also have the option of carrying neither. No chance of having your cash or CC stolen in your drunken stupor.
    When ready to pay for your drinks, pull out your phone and pay to the pubs agent account. Done.
    No need to show ID, sign anything etc.
    And, if your phone does get stolen, the thief has no access to your funds. Theyd practically have to kidnap you too to get at the funds:
    If you do send them money, they are identified because all users are registered. Much safer than a credit card where the thief can simply walk into a store and use your card before you realise its gone. Ive yet to hear of anyone that ever stole a phone and withdrew cash from Mpesa. As for stolen credit cards and hacked paypal accounts….
    I daresay, Mpesa is way more secure than a credit card or paypal. I’ve yet to hear of an equivalent (usewise) in Europe or US.
    I personally have not stepped into my bank for ‘basic’ transactions in years.

  17. […] to market along with their cattle, ready to stock up on essentials to bring back to their homes. Read More. Share This Post Tweet!function(d,s,id){var […]

  18. […] entrepreneurs the flexibility to design technology that is relevant to various local populations. Kenyan’s Mobile Money Ecosystem, for instance, is an example of a broad mobile system that acts as a necessary payment system for […]

  19. chalisto Baba
    Kisumu, Kenya
    October 29, 2012, 3:01 pm

    The innovation of Mobile Banking in Kenya pioneered by M.Pesa is enough testimony that Africa is trying to keep abreast with the technology just like the rest of the continent……..there is light at the end of tunnel and a billion reasons to celebrate mobile banking in A frica.

  20. Majid Adam
    October 23, 2012, 1:54 pm

    I think it is the best option to date, nothing can beat
    mpesa system. Kenyas we are much far ahead with mobile money in the world.

  21. […] all the time that I was back in Kenya with its ubiquitous mobile banking infrastructure, led by Safaricom’s M-Pesa.  I was a regular and avid user of Safaricom’s services – the $4 garbage bill?  […]

  22. New Ways to Pay and Be Paid | Beyond Money
    October 4, 2012, 10:01 am

    […] in Kenya that uses mobile phones to provide an easy way of making payments. The article is, The Invisible Bank: How Kenya Has Beaten the World in Mobile Money, by Olivia […]

  23. […] The Invisible Bank: How Kenya Has Beaten the World in Mobile Money […]

  24. Quora
    September 30, 2012, 3:39 am

    How could mobile technology improve lives in poor developing countries?…

    The most notable use of mobile technology in under-developed countries has been “mobile banking for the under-banked”. A great example of this is m-pesa, the mobile banking ecosystem which has completely revolutionized money transfer in African count…

  25. While We Moo «
    September 28, 2012, 6:23 am

    […] most widely used cash transfer app in the world, M-Pesa, was first created and launched in Kenya in 2007. Today the app supports 23,000 jobs and has 17 […]

  26. […] Kenya – the forefront of mobile commerce believe it or […]

  27. Myself
    August 1, 2012, 6:04 am

    Many factors can be attributed to mPESA success. Another unique factor is Kenyans’ “peculiar” habit of sending money to their folks in upcountry (rural areas or ‘ushago’) from the urban areas where most of them work. This trait helped boost the popularity of mPESA in Kenya and that is perhaps why it could not be replicated in other countries.

    As for the gentleperson who raises questions on mPESA security, after 5 years of use I do not know of a single person who has raised security concerns. It is really a poor man’s PayPal. Fast, secure and convenient. There could be fraudsters out there but the security is topnotch. Pranksters are there but you will be a fool to fall for their antics.

    The transfer cost ranges from Ksh30 (the equivalent of $0.3) for the least transfer amount to a maximum of around Ksh100 (US $1.2).

    mPESA agents are at every corner, as the pictures in this blog show you. I no longer have to worry when I forget my wallet, I can have my meal of nyama choma and pay the waiter via mPESA. Speaking of nyama choma, when you visit Kenya, make sure you don’t leave before having a bite. Down it with some Ugali and a Tusker.

  28. […] to Compensate Users for their InfluenceHow Good Design Can Guide People to Smarter Money DecisionsThe Invisible Bank: How Kenya Has Beaten the World in Mobile MoneyFoap: A New App to Help You Sell Your iPhone PhotosSpinlister (essentially AirBnB for bike […]

  29. Brian
    State College
    July 16, 2012, 4:56 am

    @ Bobloblaw and RealityCheck, M-Pesa was not created and developed by Vodafone. Vodafone is a minority shareholder of Safaricom, the company that launched M-Pesa. The only companies involved in developing M-pesa were Sagentia and IBM in partnership with Kenyans. So I don’t know what you guys are on about.

  30. […] If your brand has global ambitions, are you trying to reach this demographic?   If you’re a CPG brand, have you considered making smaller portions of your products to meet his budget?  Think Coke. If you’re a financial services, how might you help someone with modest means armed with just a cell phone to manage their cash flow?  Think M-PESA in Kenya. […]

  31. jitendra
    July 13, 2012, 6:40 am

    Nice article.I must say it could also be implemented in developing country like Nepal.

  32. OA News: July 1-9, 2012 » oAfrica
    July 9, 2012, 10:40 pm

    […] The Invisible Bank: How Kenya Has Beaten the World in Mobile Money {NatGeo} […]

  33. Olivia O'Sullivan
    July 9, 2012, 12:22 pm

    Thanks for your comments, RealityCheck – yes, mPesa was developed by Vodafone, in partnership with Safaricom, as I mention in the article. And thanks for mentioning the consultancy Sagentia, which also played a crucial part. What I wanted to highlight in the article is the way mPesa has been taken up so quickly and used so creatively in Kenya specifically. As Ken says, it hasn’t achieved such traction anywhere else. The duo who pioneered the project at Vodafone, Susie Lonie and Nick Hughes, talk in this article about the way Kenyan traders and customers in the pilot scheme picked up the service very quickly and used it in ways they didn’t expect, which shaped its development:

    “After running the pilot for about nine months we started to see customer behaviour that said actually, this is much more useful as a person to person money transfer system,” says Mr Hughes

    “At that point the lights went on and we realised where the scale opportunity was.”

    As for information on security and cost, as well as potential downsides, you’re right those are interesting aspects to be addressed. However, as I write in the introduction, the article is meant to be a bit of a ‘beginner’s guide’ and a basic overview of the service and its achievements on its fifth birthday. Of course there are downsides and complexities, unfortunately there isn’t unlimited space to discuss them in a blog post like this. As Ken says, perhaps we can do a follow-up which looks at these aspects in more depth. Thanks for reading.

  34. Ken Banks
    July 9, 2012, 4:34 am

    @RealityCheck – Thanks for the follow-up comments. The purpose of our column is to highlight how technology is positively impacting peoples’ lives, with a particular focus on the developing world. We’re obviously limited by how much we can write, and we write for a general audience/readership. Because of those things we’re unable to cover all aspects of what are often complex and deep subjects. In many cases, where we spark interest (and this is our primary aim) people go on and do further searching and research themselves. We may do a follow-up piece on mPesa in the future and will certainly keep your comments and suggestions in mind if we do.

  35. RealityCheck
    July 8, 2012, 7:17 pm

    To Ken Banks:
    When I read the following in the article….

    ” In banking and finance, the big ideas in cashless transfers and mobile, flexible exchanges are not to be found in Geneva or London or New York. A revolution in mobile money transfer has occurred, but not in these financial centres. Instead, it’s happened in Kenya, with m-Pesa.”

    … it sure left me with the (wrong) impression that M-Pesa was developed in Kenya.

    As written, I find this article more of an attempt at feel-good “cheerleading” than to inform. It is rather shallow and amateurish in that it doesn’t provide important information regarding:
    a. security
    b. cost
    c. fraud protection
    d. why it’s not used in advanced countries (if it’s so great)

    I expected something with more depth and substance from NG. Perhaps you can do a follow up with a more factual and informative bent.

  36. Erik Voorhees
    United States
    July 8, 2012, 6:59 pm

    Perhaps a smart person in Kenya will realize soon that he can bypass the middlemen entirely (saving all those fees) and also bypass the inflation of the local currency, by using SMS systems with Bitcoin. That would also give them access to an entire global market beyond Kenya entirely.

  37. Ken Banks
    July 8, 2012, 3:50 pm

    @RealityCheck @Bobloblaw – The article doesn’t claim that mPesa was developed by Kenyans, but that it was “an idea which has been tailored to the Kenyan environment”. Despite attempts to replicate mPesa (in various guises) in other countries, no-one has got even close to the traction that Safaricom have achieved.

  38. Ravi
    July 8, 2012, 10:36 am

    Excellent article, I will be reposting this on our blog

  39. Bobloblaw
    July 8, 2012, 4:53 am

    MPesa was developed by Vodaphone not by kenyans.

  40. RealityCheck
    July 8, 2012, 4:16 am

    The M-Pesa system was created and developed by two British companies – Vodaphone and Sagentia. Sorry to bust your bubble.


  41. Olivia O'Sullivan
    July 6, 2012, 6:24 am

    Hi Jay,

    I take your point – the system wasn’t developed in London or Geneva or New York precisely because it isn’t really the right system for those environments. This is what I think is really interesting and encouraging about mPesa though, that it’s calibrated to Kenya’s economic environment, rather than being an attempt to imitate an unsuitable model. So I agree – it actually isn’t that surprising mPesa hasn’t taken off in the ‘West’, but it’s nonetheless innovative, in a way people often don’t expect of a developing country. I really appreciate your response at the link analysing innovations elsewhere – interesting stuff!

  42. Sam
    July 6, 2012, 4:20 am

    M-Pesa is damn expensive. They keep adjusting the transactions costs

  43. Gideon
    July 5, 2012, 10:45 pm

    Using your m-pesa account, you can; pay for your taxi, pay for your shopping at any mall, supermarket or any retail store, pay bills including electricity and water bills, pay for your air ticket, recieve your months pay, widhdraw and deposit money from and into your bank account without standing in line.. Everything is just a click away.. And the good news is that if you make a mistake you can reverse your transaction… This is the most revolutionary piece of technology in the twenty first century!

  44. cjm
    New Zealand
    July 5, 2012, 6:16 pm

    always wondering n hoping the infrastructure will last, also that fraud doesn’t get a hold.. and thirdly that NZ will soon be included as I still cannot remit $$ to EA without great cost.

  45. Kimani
    July 5, 2012, 5:57 pm

    Nice article and positive. All mobile phone companies in Kenya has the money transfer system but Safaricom started it

  46. Jay
    San Diego
    July 5, 2012, 1:13 pm

    A great article and M-Pesa is indeed a great success. However, I have to challenge your statement that “cashless transfers and mobile, flexible exchanges are not to be found in Geneva or London or New York” and that it is Kenya where a “revolution in mobile money transfer” is taking place. This is a widespread notion, but it also is very incorrect.

    We don’t have an M-Pesa-like system in the U.S. not because no one had thought of it, but because there is no need for it. There are many, many different options for us to make electronic payments and to transfer money. If a mobile payments platform were to gain traction with consumers in a developed country, it would have to either offer them a clear advantage over the existing systems or to offer an entirely new service altogether. And this is precisely what we have seen in the past few years. Perfect examples are:

    – Square, which introduced direct mobile phone-based card acceptance to consumers.
    – BOKU, which was among the first companies to develop a direct carrier billing system.
    – Google Wallet and Isis, which are the most prominent mobile wallets.

    For a more detailed analysis, go to http://blog.unibulmerchantservices.com/m-pesa-at-5-a-huge-success-but-has-its-limitations.

  47. Andrew Kirwa
    Kitale, Kenya
    July 5, 2012, 2:11 am

    Nice article. To expand on it though, the newest development is the linkage between M-Pesa and regular bank accounts. We can now transfer from our bank accounts to M-Pesa and vice versa. Making banking for any cash below Kenya Shillings 150,000 a breeze. No going to the bank, just wire the money straight to your account from your phone. The reverse is also true, withdraw cash through your cell phone, without stepping in the banking hall. Kudos for highlighting the saying ”necessity is the mother of invention”.

  48. Ken
    July 4, 2012, 11:53 pm

    Always refreshing to read a well researched article on the positives happening in africa that more often than not get swept under! Good and refreshing read indeed

  49. Nnenna
    West Africa
    July 4, 2012, 5:07 pm

    I was under the impression that mobile money was for Africa, or at least for poor countries. But no, I saw UK Telecom operators offering mobile money services..

    Congrats to Kenya.