M-Pesa Blends Fintech + Mobile in Kenya

I rarely go to the bank nowadays.
~Taxi driver in Nairobi, Kenya speaking to
a 60 Minutes reporter about M-Pesa

Lipa Na M-Pesa M-Pesa is the mobile payment service that dominates Kenya. M-Pesa runs on mobile phones, and you can use it to pay for almost anything. M-Pesa is used by Kenyans regardless of income level, technical skill, or location (urban or rural). In 2015, 42% of the Kenyan GDP was processed through M-Pesa.

“Pesa” is the Swahili word for money, and the “M” stands for mobile. “Lipa na M-Pesa” means “purchase with M-Pesa”. My first M-Pesa experience happened during RubyConf Kenya in May 2016. So many developers at the conference raved about the service that I had to try it.

Running on the SIM Card

M-Pesa runs on a mobile phone’s SIM card. Therefore the app can run on any mobile phone, from the latest smartphone to the oldest feature phone. To run the app on my iPhone 6, I followed these steps:

…and I was ready to start using M-Pesa.

Safaricom SIM card

First Purchase

Safaricom SIM Applications On a feature phone, M-Pesa appears on the menu with all of the other apps on the SIM card.

On a smartphone, using M-Pesa requires navigating to “SIM Applications” and finding the M-Pesa app. If a business accepts M-Pesa for payment, they will have a till number. Enter the till number into the M-Pesa, enter the amount you owe, confirm the transaction, and you’re done. It’s that simple.

M-Pesa Payment Process

Payments are sent between individuals just as easily. Sharing a cab? Each party can send their share to the driver via M-Pesa.

The Future of M-Pesa

The future looks bright any time young people with technical skills get excited about an idea. While in Kenya, I met several software developers who are building apps and businesses on top of the M-Pesa payment system. Way to jump on an opportunity! The M-Pesa ecosystem is a cool blend of financial technology, mobile communications, and user experience. We know the UX is solid because everyone in Kenya uses M-Pesa.

M-Pesa vs Bitcoin

A comparison between M-Pesa and Bitcoin might seem “apples-to-oranges” to those with deep blockchain knowledge. But the comparison has value because:

Having used both M-Pesa and Bitcoin, here’s my assessment.

Bitcoin is still in the “early adopter” stage of Clayton Christensen’s technology adoption framework. Early adopters are willing to put up with a few headaches or obstacles. But the masses of people want something easy to use. That’s where M-Pesa fits the bill.

Feel free to express yourself in the comments if you disagree :-)

Fintech Excitement

Any time we have a product used by so many people, from such a diverse set of backgrounds, network effects come into play. Safaricom is in an excellent position to benefit from the network they’ve built. Somewhere, maybe sometime soon, a smart group of developers will build on top of the M-Pesa platform and benefit, too.

What an exciting time to be in fintech!