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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,...

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 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:


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:


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

Digital Diversity is produced by Ken Banks, innovator, mentor, anthropologist, National Geographic Emerging Explorer and Founder of / 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.

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Meet the Author

Author Photo Ken Banks
Ken Banks is an innovator, mentor, anthropologist and National Geographic Emerging Explorer. Founder of and now Head of Social Impact at Yoti, he spends his time applying Yoti's digital identity solutions to humanitarian problems around the world. His earlier research resulted in the development of FrontlineSMS, an award-winning text messaging-based field communication system designed to empower grassroots non-profit organisations. He shares exciting stories in "Digital Diversity" about how mobile phones and other appropriate technologies are being used around the world to improve, enrich, and empower billions of lives.