Mobile money in Kenya: how M-Pesa is reshaping digital finance in emerging markets
In January 2019 Safaricom launched Fuliza, an overdraft facility for M-Pesa users who had run out of digital credit. In its first month, Kenyans borrowed more than $60 million through it. The monthly charge, depending on the band, could hit 60% of the value borrowed. Six months in, cumulative borrowing reached $800 million.
Fuliza runs on M-Pesa, start to finish. This is the same infrastructure that spent 19 years positioning itself as a neutral utility, a pipes-and-plumbing story about financial inclusion.
Financial services for all
M-Pesa launched in 2007, operated by Safaricom with backing from Vodafone and Vodacom. It aimed to bring financial services to Kenya’s unbanked by storing and transferring value between mobile numbers via SMS. No bank account, credit history or proof of residence required.
“If you’re living in a slum, you can never provide proof of residence. That is already a fail for getting a bank account,” says Richard Mifsud, founder of Xprizo, a fintech operating across East Africa, Southeast Asia and Latin America. He explains, “M-Pesa allowed people into a fintech ecosystem who were completely excluded before.”
M-Pesa now spans seven African countries, hitting 50 million customers in 2021. Samora Kariuki, founder of Frontier Fintech, estimates each year it processes transaction volumes equivalent to close to three times Kenya’s entire GDP. “It is a systemic risk to the economy,” he says plainly. Too big, in his view, to be allowed to fail.
The betting ecosystem M-Pesa built
M-Pesa has been integral to the growth of Kenya’s online betting market, providing the environment itself.
By 2018 online betting was pulling in $2 billion a year in Kenya. According to government data, that was a hundredfold increase in five years. Polling firm GeoPoll found 96% of gamblers placed bets by mobile phone. This figure demonstrates what happens when a payment infrastructure becomes frictionless for the first time.
“When M-Pesa wasn’t around, the only way to do gaming was to have gaming shops,” says Mifsud. One integration replaced thousands of physical locations, and the customer acquisition costs that went with them. A direct M-Pesa integration requires a local betting licence; those without one route through aggregators, which adds friction and cost.
SportPesa understood this faster than most. Before a tax dispute over stake levies forced it to temporarily exit the Kenyan market in 2019, the company had scaled quickly, on M-Pesa’s infrastructure, to sponsor English Premier League clubs. MozzartBet, Betika and Betin built on the same foundation.
This dominance is not just inertia; it is a competitive advantage for the entire ecosystem.
— Felix Mulandi, Senior Gambling Professional
Felix Mulandi has spent more than a decade working across African betting markets. He describes M-Pesa’s position in the bettor’s mind as something more entrenched than a payment preference. “For most sports bettors and casino users, it is still the default deposit and withdrawal method due to its speed, trust and ubiquity,” he tells iGB. “Importantly, this dominance is not just inertia; it is a competitive advantage for the entire ecosystem”.
However, operators tend to discover their exposure when volumes are highest. When M-Pesa’s systems are under pressure, during a Champions League night for example, failed deposits cascade into delayed callbacks, incomplete confirmations and reconciliation. These problems land on the operator’s support team rather than Safaricom’s.
And yet operators keep building on it. Because the alternative, trying to shift Kenyan bettors onto a different payment rail, is not a serious option. The reach and conversion rates M-Pesa deliver are not replicable elsewhere in the market.
Frictionless by design, risky by consequence
M-Pesa aims to make financial transactions quick and simple, like sending a text. That principle drove adoption across a generation of previously unbanked Kenyans. It also, when layered on top of a betting product, does something else entirely.
“The frictionless nature of M-Pesa has a clear impact on betting behaviour,” Mulandi says. “Instant deposits allow users to move from intent to wagering within seconds, which reduces abandonment and increases engagement, particularly in live sports betting environments where decisions are highly time-sensitive”.
Faster deposits improve conversion. Operators design products with this in mind. But Mulandi insists this should not undermine responsible gambling, “The key balance,” he says, “is not removing speed, but pairing it with better user-level controls”.
M-Pesa transactions do not appear on bank statements, which has led to concerns about transparency. Kariuki pushes back on this, arguing the transactions are visible to regulators, while the platform actively monitors cryptocurrency flows. But Mifsud identifies that deposits into a betting account do not have to come from the bettor’s own registered M-Pesa number. Third-party top-ups are possible, so unless an operator enforces single-number registration rules, there are KYC questions that do not have clean answers.
Mulandi’s take is the most operationally grounded of the three. “Mobile money can create fragmented visibility of user spending across multiple betting platforms, which makes full affordability assessment more complex,” he says. “However, it has also been a catalyst for more advanced real-time payment data usage within operators, enabling faster detection of high-frequency betting behaviour at single-operator level”.
Single-operator level is the crucial qualifier. A bettor using three platforms via M-Pesa generates no consolidated spending picture visible to any of them.
Mulandi argues the industry should not slow down the payment system, but build smarter controls. “There is a clear structural tension,” he says. “M-Pesa is designed for speed, simplicity and instant completion, while responsible gambling frameworks often require friction, checks and intervention points. The challenge is how to layer responsible gambling tools on top of a highly efficient transaction rail without disrupting user experience”.
That tension is unresolved. It’s probably going to stay that way for a while.
Can a platform be inclusive and extractive?
M-Pesa charges fees, which fall harder on the less affluent. Kariuki explains, “Transaction charges are a regressive tax on economic participation because that is the only way the mobile money model economics can work,” he says. “Lower earners pay a higher percentage of transaction fees vis-a-vis higher earners”.
Mifsud is relaxed about the fee question, pointing out that take-rates have fallen significantly as the platform has scaled.
Kariuki is more concerned about the business model, rather than the current fee level. As M-Pesa matures and cash-in/cash-out revenue flattens, the platform has a strong incentive to find new ways to monetise. This tends to come at the expense of third parties—fintechs, operators and banks—building on top of the infrastructure.
Telcos are expected to deliver predictable and growing revenues
— Samora Kariuki, Frontier Fintech
“It is an inherent feature of mobile money ecosystems run on telco rails,” Kariuki says. “Telcos are expected to deliver predictable and growing revenues to fund fixed costs and dividends. If the platform matures, there is a decline in CICO revenue and a natural increase in ecosystem revenues”.
Fuliza is arguably the clearest example of this, although not the only one.
For Mifsud, whose company Xprizo has spent six years building on top of this kind of infrastructure, the response is not to fight it. “Rather than going head-to-head against M-Pesa, we integrate it into our platform,” he says. “We’re working with them, rather than against them”. It is a pragmatic position, but it does mean accepting Safaricom sets the terms of the relationship.
What mobile money must do differently
Kariuki is sceptical that M-Pesa can be replicated as the conditions that made it work are gone. “M-Pesa’s structural evolution is tightly tied to Safaricom’s revolution,” he says. “We’re unlikely to see another M-Pesa”.
There’s a counterintuitive wrinkle here that Kariuki raises. In markets where competition arrived early, agent environments are messy, compliance is patchy, standards vary and accountability is diffuse. M-Pesa’s dominance was unhealthy for competition, but gave Kenya’s Central Bank one entity to enforce KYC, AML standards and agent conduct. He points to Nigeria, where the Central Bank recently introduced rules requiring agents to represent only one company. This is an attempt to bring cohesion—something that M-Pesa delivered automatically in Kenya—to a fragmented market.
Safaricom’s near dominance of Kenya’s telecoms market was the precondition for M-Pesa’s supremacy in payments. In markets where multiple telcos compete from the start, agent networks are fragmented, standards are inconsistent and no single regulator has a clear line of accountability. M-Pesa’s position can’t be recreated in a more competitive environment.
Kariuki’s prescription for the next wave is a Central Bank-led instant payments system, such as UPI in India, Pix in Brazil or NIBSS in Nigeria. Open rails that enable fintechs and operators to build and compete on top of shared infrastructure, rather than being locked into a single telco’s ecosystem. On this infrastructure, M-Pesa could still be a major player, but among others.
Meanwhile, Mifsud questions the payments gap between African countries. A transaction that moves instantly between two Kenyan accounts becomes a slow, expensive international wire when it crosses into Tanzania or Uganda. “The intra-Africa payment problem is massively underrated,” he tells iGB. For operators building at regional scale, it’s a hard ceiling on what’s possible.
Kenya’s recent finance bill proposed a 16% VAT on fees charged by M-Pesa and Airtel Money. If passed, these measures will take effect from July 1st. The cost is expected to reach consumers. It adds weight to Kariuki’s regressive fee argument as M-Pesa’s total dominance is slightly slipping. The platform’s share of Kenya’s mobile money market fell to 89% in December 2025, down from a peak of 98%. At the same time, Airtel Money is gaining ground as a cheaper alternative.
The systemic stakes are not abstract, and Kariuki doesn’t present them as such. “M-Pesa handles close to three times Kenya’s GDP in transaction value. It is a systemic risk to the economy”. He believes that concentration is a significant driver of the Central Bank of Kenya’s interest in state-led payment infrastructure, which would be a counterweight to M-Pesa.
When thinking about overseeing mobile money, Mifsud believes regulators in other markets need to resist the pull of Western banking frameworks. “If mobile money platforms were regulated exactly like banks, we would go back to financial exclusion,” he says. “The way we understand traditional banking in the West is not a one-size-fits-all for all other markets.” He advocates for a hybrid approach. This would include biometric identification, facial recognition and geolocation data, all flexible enough to onboard those who can’t produce a utility bill, yet rigorous enough to satisfy AML obligations.
If mobile money platforms were regulated exactly like banks, we would go back to financial exclusion
— Richard Mifsud, Founder of Xprizo
Mulandi has clear advice for operators entering markets where mobile money is still being developed. He says they should build interoperability, diversified payment rails, real affordability visibility and responsible gambling infrastructure into the foundation, not as retrofits.
Key takeaways
- M-Pesa’s frictionless transaction design drove Kenya’s online betting market growth, but also amplified impulsive betting behaviour
- Operator dependency on M-Pesa’s infrastructure represents both a concentration risk and a core growth enabler
- Transaction fees on mobile money platforms function as a regressive tax on lower earners, creating tension between inclusion and extraction
- Central Bank-led instant payment systems would enable fintechs and operators to build on shared infrastructure
- Emerging markets building mobile money ecosystems should embed resilient consumer payment infrastructure from the outset
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