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M-Pesa: The story behind the biggest mobile money service in Africa

Mobile money

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M-Pesa, which stands for “Mobile Money” in Swahili, is a mobile phone-based money transfer, financing, and microfinancing service in Africa. It was first launched in Kenya in 2007 by Safaricom, the country’s leading mobile network operator. Since its inception, M-Pesa has grown to become one of the most successful and predominantly operating services in Asia, Africa, Europe, and Oceania.


The idea behind the mobile money solution M-PESA


While working at Vodafone Group plc, a British multinational telecommunications company, Nick Hughes had the idea to start a mobile money solution: mPESA. When Nick pitched the idea to the senior management, he received a pushback.

‘We aren’t in the banking business,’ they said.

However, Nick applied for a DFID innovation challenge and won, receiving valuable startup capital for the idea.

What happened in Kenya next helped shape M-Pesa.

In the industrial town of Thika, M-Pesa was piloted as a micro-finance loan platform with several hundred customers, organized into groups, including people appointed as treasurers and secretaries.

“It was a very complex microfinance disbursement and recovery platform. Microfinance, of course, at that time was key… So we thought we were on a great thing in building this microfinance payments platform.”

However, a few weeks after the pilot of the service, Hughes and his team started to notice that their customers were loading more money onto their wallets than they needed to be able to pay their group’s treasurer.

Customers had not only found the mobile wallets convenient when it came to paying the microfinance group treasurers, but had also used the wallets to pay friends and family within the test group.

“So of course, a light went on – we cut out all that complexity in the microfinance loan system and went to market with a send-money-home, person-to-person payment platform… and the rest is history. We launched M-Pesa in 2007.”


Result: M-Pesa, a highly successful mobile money service


Today, M-Pesa is Africa’s most successful mobile money service and the region’s largest fintech platform. It is the preferred way to make payments for more than 51 million customers across seven countries in Africa both for the banked and unbanked due to its safety and unmatched convenience.

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Here are some indicators of M-Pesa’s success:


User Adoption and Reach


  • M-Pesa has millions of users across multiple countries, particularly in East Africa, including Kenya, Tanzania, and Uganda.
  • It has successfully reached the unbanked and underbanked populations, providing them with access to financial services through their mobile phones.
  • Transactions are conducted through a mobile phone, and users easily deposit, withdraw, or transfer money using the M-Pesa platform. This led to a high user adoption rate.
  • M-Pesa’s reach extends to cross-border transactions, allowing users to send and receive money internationally. This feature has been especially important for migrant workers who can send money to their families in their home countries.


Related Read: Idea Tracking is the Future of Business


Financial Inclusion


  • M-Pesa has played a significant role in advancing financial inclusion by bringing individuals into the formal financial system who were previously excluded due to various factors, such as lack of documentation or living in remote areas.
  • In regions with limited brick-and-mortar banks, M-Pesa serves as a virtual financial platform. Users can access services without the need to visit physical bank branches, which is especially important in rural areas.
  • M-Pesa has evolved to offer microfinance services, allowing users to access small loans through their mobile phones. This has empowered individuals to start or expand small businesses and manage their finances more effectively.
  • M-Pesa enables users to save money electronically. Even individuals without traditional savings accounts can securely store their funds in their M-Pesa wallets, fostering a culture of savings and financial management.


Innovation and Adaptability


  • M-Pesa has continually evolved, introducing new features and adapting to changing technological and regulatory landscapes. This adaptability has contributed to its sustained success.
  • M-Pesa has continually invested in technological enhancements to improve the user experience and security of the platform. This includes the development of user-friendly mobile applications and the implementation of advanced security measures.
  • M-Pesa has demonstrated adaptability in navigating regulatory landscapes. In some instances, regulations affecting mobile money services have changed, and M-Pesa has adjusted its operations to comply with these changes while maintaining service continuity.


Related Read: How to build an innovation strategy?


In Conclusion


The ability of M-Pesa to innovate and adapt to changing circumstances has been essential in maintaining its relevance and leadership in the mobile money space. This adaptability has not only allowed M-Pesa to meet the diverse financial needs of its users but has also positioned it as a model for successful financial inclusion initiatives globally.

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