A Mobile Banking Powerhouse Born From Bus Fare Theft

A microfinance pilot project pioneered in Africa turned into one of the world’s most successful mobile banking systems thanks to one woman’s bus fare getting stolen. Now the service could make its way to the United Kingdom.



M-PESA, one of the world’s most rapidly expanding mobile banking systems, is transforming the banking sector in Africa. And it started, in part, when a thief stole bus fare from a woman who was participating in the M-PESA pilot.

Until then, M-PESA was a microfinance initiative, but the victim’s husband used the mobile pay service to transfer funds to her phone–essentially giving his own wife a microloan–so she could use the phone to offer proof of payment for the bus ride. After the theft, the M-PESA team realized what a potent alternative banking tool they had in their hands.

“During the pilot we were supposed to focus on microfinance but we hatched a plot to launch the peer-to-peer money transfer functionality at the same time, without telling anyone,” said Paul Makin, one of the initial project leads at Vodafone who now runs mobile money at Consult Hyperion. Vodafone first launched M-PESA after the U.K.’s Department for International Development (DFID) had already piloted it and the service is now run by Vodafone’s Kenya subsidiary, Safaricom.

At the heart of the project’s success is the idea to expand beyond microfinance into the broader area of transactions. With that more inclusive goal, M-PESA took off in Tanzania, Kenya, and South Africa, allowing users to go about their day without large amounts of cash in their pockets and while saving time on transactions and travel.

“We told the financial regulator we thought we would have a quarter of a million customers after three years,” said Makin. “He could see the potential, so he was very supportive. But if he had known it was going to grow as big and as quickly he might have had second thoughts.”

Since 2007, the number of users of the service has grown to over 13 million in Africa, Afghanistan, and India.


In Kenya, 90% of the population does not have a bank account, according to some statistics. Plus, Kenyans often work hours away from their villages. The time and expenses saved by instantly making payments via text message with M-PESA are improving the qualify of life for millions of people there.

“People would disappear from their jobs for three or four days having just been paid, to take money to their families,” said Makin.

People in Kenya are now using M-PESA to make basic utilities payments, transfer funds to family members far away, and purchase insurance. And mobile banking itself has been so well-received that off-shoot mobile banking services are proliferating.

The model could even be transferred abroad to the West, in an uncommon transfer of innovation from the developing to the developed world.

“For a long time I advised Vodafone not to launch it in the U.K.,” said Makin. “But in the last year I have become convinced there is a business case.”


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[Images top to bottom: flickr users emilsjoblom and sociate]

About the author

Jenara is an overseas reporter for Fast Company and a freelance writer/producer in Asia, regularly on CNNGo, and a graduate of Harvard and UC Berkeley.