Dial M for Monopoly


Last week, Apple Pay launched in the UK, allowing the use of iPhones in place of credit and debit cards. The technology behind Apple Pay has been around for a while, but it has not been widely adopted as of yet. The world of British finance and technology is waiting on tenterhooks to see if Apple can revolutionise yet another industry.

6900 km away in Nakuru, Kenya, mobile payments are old news. The fact that Britain has not yet embraced this technology makes it seem somewhat backward. Launched in 2007 by Safaricom, Kenya’s largest mobile network, M-Pesa is a mobile payment service, allowing Kenyans to send money instantly to any other Safaricom users, which, at 23 million, is 67% of all the country’s mobile subscribers. The beauty of M-Pesa is that it works from the most basic of mobiles and no bank account is needed. Instead, cash is loaded onto an M-Pesa account by visiting an M-Pesa agent.  The ubiquity of these M-Pesa agents is such that, despite having only spent four weeks in Kenya, I can no longer imagine walking down a street without seeing the distinctive green logo emblazoned on every other shop. M-Pesa can then be used for anything from sending money to relatives on the other side of the country, to paying for a five-minute taxi ride. The amount of money annually transferred through M-Pesa is now equivalent to a staggering 40% of Kenyan GDP. Its success in Kenya has been such that it is being adopted in an increasing number of other countries around the globe.


During a weekend trip to Lake Victoria, we took a boat ride, stopping on an island barely larger than one square kilometre. Walking through the island’s tiny village, Sammy, our guide, informed us that, in contrast to Kenya’s urban centres, life on this island had not yet been significantly affected by exposure to modern technology – with one exception: the small collection of solar panels and a satellite dish which link the island to the M-Pesa network. The island’s fishermen, many of whom travel from far afield to work on the island, are now able to collect their wages without hassle and send money back to the towns and villages from which they came and where many of their family still reside.

M-Pesa also provides extra income for the shopkeepers who choose to become registered agents. Solomon is an entrepreneur who runs a shop selling cooking gas and food grains just outside Nakuru town. He is also an M-Pesa agent. This both attracts new customers to his business and earns him a monthly commission from all the transactions he processes.

M-Pesa Shop

While M-Pesa has provided great benefits for many of Kenya’s population, it is not without controversy. It currently handles 95% of all mobile money payments and its rivals complain it is too monopolistic. It has also come under scrutiny for its high transaction fees, which can reach 10% of the value transferred.

Airtel, one of Safaricom’s main rivals in Kenya, has developed its own mobile transfer service known as Airtel Money. So far this has made little dent in M-Pesa’s market share, yet it makes an attractive alternative in that it currently charges no transaction fee. It has also partnered with Equity Bank, one of the country’s most popular. Airtel is not alone in its chase of M-Pesa’s market share, as reflected by the business ideas of some Balloon Entrepreneurs.

Francis has been an M-Pesa agent for three years, but he wants to expand. One of his aims over the course of the Balloon programme is to become a SafePay agent – SafePay is a Kenyan start-up that also processes payments and offers cash and card receipting services.

At the time of writing, Safaricom and Airtel are about to go to court in a clash over copyright infringement. Revolutionising an industry may have led Safaricom to a monopoly that Apple could only dream of, but the road looks set to be a lot rougher from here on out.

By Gus Allen, Balloon Kenya Fellow, Nakuru 2015