The archive · Money & Fintech · Product decision · 2007–2023
M-Pesa's mobile-money bet: from 2007 pilot to Africa's biggest payments platform
M-Pesa bet Kenyans would move money by phone; from a 2007 loan-repayment pilot it grew to 21B transactions worth KShs 35.9T in FY2023.
M-Pesa (Safaricom)
What the business is
Mobile money: phone-based deposits, transfers and payments built on Safaricom's network in Kenya.
Starting capital：Developed with funding from the UK's Department for International Development and Vodafone, executed by Sagentia (Safaricom newsroom).
How it started
In 2007 Safaricom launched M-Pesa, built with UK government funding and Vodafone and executed by Sagentia. The first 500 test customers were supposed to use it to repay microfinance loans, but instead started sending each other money — and the team's 'send money home' USP came from watching them. CEO Michael Joseph raised the first-year target from 300,000 to one million a week after launch; the team enrolled two million customers in year one (Safaricom newsroom).
What happened
Jack and Suri's NBER working paper (2011) documented how quickly households adopted M-Pesa for saving, remittances and purchases. By FY2023 M-Pesa handled 21.03 billion transactions worth KShs 35.86 trillion — nearly three times Kenya's GDP — with value up 21.4% and volume up 33.5% year-on-year; M-Pesa revenue rose 8.8% to KShs 117.2 billion, and global payments grew 17% (Safaricom Annual Report 2023; The Star).
How it ended up
Still live and expanding: as of FY2023 (year ended 2023-03-31), M-Pesa is Safaricom's biggest revenue engine and Africa's leading mobile-money platform, processing up to 2,600 transactions per second and supporting credit products such as Fuliza as Safaricom rolls out operations in Ethiopia.
Background
Safaricom launched M-Pesa in 2007 with UK government funding and Vodafone, betting that Kenyans without bank accounts would move their money through mobile phones. The platform was built by Sagentia as a loan-repayment channel, but its first 500 test customers ignored that purpose and started sending each other money — the behaviour that became the product.
The team repackaged M-Pesa around 'send money home', solving the real pain of urban Kenyans sending cash to relatives upcountry by bus or hand-carry. CEO Michael Joseph raised the first-year customer target from 300,000 to one million a week after launch, and the team enrolled two million customers in year one (Safaricom newsroom).
By FY2023 (year ended 31 March 2023), M-Pesa processed 21.03 billion transactions worth KShs 35.86 trillion — nearly three times Kenya's GDP — at up to 2,600 per second, with transaction value up 21.4% and volume up 33.5% year-on-year, and M-Pesa revenue up 8.8% to KShs 117.2 billion (Safaricom Annual Report 2023; The Star).
What has to be true
- It digitised an existing behaviour — sending money home — instead of inventing a new one, and the pilot users themselves pointed to it.
- The economics were proven by real usage: by FY2023 the platform moved nearly three times Kenya's GDP in a single year.
- It reached people the banking system excluded, enrolling two million customers in its first year.
- Safaricom already had distribution — mobile subscribers and an agent network — to turn a payments tool into a mass-market utility.
What can be applied
Follow what users actually do: M-Pesa's first test users turned a loan-repayment tool into peer-to-peer transfers — Safaricom rebuilt the pitch around 'send money home' and created a category.
Aftermath
As of The Star's 10 July 2023 report and Safaricom's FY2023 annual report, M-Pesa is Safaricom's biggest revenue engine and Africa's leading mobile-money platform: 21 billion transactions worth KShs 35.9 trillion in the year, with global payments growing 17% and credit products like Fuliza layered on top. Safaricom is rolling out operations in Ethiopia, and the service continues to expand beyond person-to-person transfers into merchant payments, lending and a super app — a live bet that keeps being extended rather than a finished story.
Sources
- Mobile Money: The Economics of M-PESA (Working Paper 16721)
- M-PESA — Annual Report 2023
- M-Pesa transacted Sh36 trillion, three times Kenya's GDP — report
- How M-PESA was created
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