Ever used Venmo, Apple Pay, Cash App, PayPal or Crypto? 

The digital currency has become second nature to us in 2021, but have you ever wondered how it became so integrated with our lives? What steps and precursors were needed to get to where we are today?

In large part, one answer to these questions is M-Pesa. In late 2000, banks in developed countries worldwide were starting to expand into digital banking and exploring new mediums of financial technology.  Kenya, on the other hand, encountered a reluctant central bank’s response to the new ways of the world. This provided an opportunity for a creative response from a population that is largely unbanked. 

Enter: Telecommunications giant Vodafone and Safaricom, Kenya’s leading mobile network operator.

Thanks to a grant from the UK’s Dept. of International Development, a Pilot was launched in 2006, mostly as means for micro-lending. However, users quickly discovered a feature that allowed for peer-to-peer transactions. They had identified one of Kenya’s biggest needs almost completely by accident. Not only did Kenyans need a faster and easier way to transfer money, but they also needed a cheaper way to do it than bank transfers, which are largely unaffordable for such a poor population. The demand for this service reared its head in the first year of M-Pesa’s launch. Safaricom set a goal for 350,000 users on their micro-finance and loaning program, which grew to the tune of over 1.2 million users, most of which were largely utilizing the user-to-user transfer function.

Upon recognizing the need for their service, M-Pesa realized its need to provide easy ATM functions for its rapidly growing user base. Without the time or resources to open branches at such a large scale, Safaricom utilized what already exists in Kenya; small mom-and-pop stores and even smaller specialized commerce stands. These micro-businesses were weaponized as hosts for M-Pesa Kiosks across Kenya and allowed for its meteoric rise to a significant market share of Eastern Africa’s economy. 

M-Pesa’s market penetration is nearly unmatched in any industry in the world, with over 96% of Kenyan households using the service. Today, Sub-Saharan Africa boasts over 150 million active mobile money users thanks to M-Pesa and other similar services, accounting for nearly half of the world’s active monthly mobile money users.