Cashless in Kenya: A Mobile Money Experiment Using M-PESA

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Walking home from the office late one night, Amrit Pal, an Indian student working with a Nairobi-based mobile money startup for the summer, watched a man emerge from the shadows and move directly towards him.

“Hey, you got something for me?” the man said, showing a bit of muscle. Amrit reluctantly pulled out his Nokia C-01 phone, worth around $20, and a copy of his passport. The would-be-mugger looked at him, grumbled something in disappointment, and let him go.

Amrit wasn’t broke. He had several thousand Kenyan shillings in his wallet. Unfortunately for the mugger, Amrit was several weeks into an ambitious and uniquely Kenyan experiment, dubbed “Cashless for 60 days”. His wallet was actually his basic mobile phone, and his ID effectively his ATM card. 

As we’ve mentioned before, Kenya is ground zero for Africa’s “mobile money revolution.” M-Pesa, which launched in 2007, dominates the market for mobile money transactions. Nearly 70% of Kenyan adults use M-Pesa, accessing the service through over 35,000 agents countrywide. In fact, around 20% of the country’s GDP moves through M-Pesa, with over $20 Million per day in transactions. 

The numbers are impressive. Yet since its inception, M-Pesa’s revolutionary payment tool for helping “bank the unbanked,” creating a quick, efficient way to pay for everything from taxi fares to groceries without a bank account, hasn’t changed much.

“The innovation of M-Pesa on sending money is done,” Amrit told me flatly. 

For Amrit, a student who’s equally obsessed with mobile money as he is by a personal disdain for cash (“cash is one of the ugliest institutions in humanity,” he claims), M-Pesa’s ubiquitous use in Kenya presented a rare challenge for a fun little experiment.  Could he actually survive in Kenya using only M-Pesa for two full months?

“Challenge accepted.”

The logic behind his cashless experiment was twofold.  First, he wanted to demonstrate that Kenya could be the most “cash-lite” society in the world. Second, and more importantly, was guerilla-style market research. He wanted to see exactly what problems merchants face accepting mobile payments, and how M-Pesa could be improved.

M-Pesa’s runaway success in Kenya was a “green light for innovators to come and work on other things,” says Amrit. “It inspired a generation of entrepreneurs to do things.” But that’s not where the story ends. What’s really exciting, according to Amrit, is the whole ecosystem being built from M-Pesa- innovative financing schemes, buying goods, paying bills and ATM withdrawals. 

Like Apple, Safaricom, which owns M-Pesa, began as a very “closed” institution in terms of their technology and products. Apple quickly realized the value of opening up its API, allowing 3rd party developers to innovate and create apps, while M-Pesa has been a bit slower, but it’s finally opening its platform.

So what did Amrit find, aside from that living “cashless” can thwart attempted muggings? 

“The transaction fees seem minuscule, but they add up rapidly,” he exclaims. “M-Pesa is expensive when you’re using it for a cold drink or samosa. You’ll pay about 10% for a 100 shilling transaction.”

Making quick, low-value transactions like paying for matatus (speeding mini-buses) or snacks proved to be difficult. He started with 4.75% in weekly overhead charges, and by the end of his experiment had craftily brought it down to 1.7%, by getting restaurants he frequented to accept batch payments every Friday, and not paying the “withdrawal” fee that merchants were asking of him.

His best experience? On a matatu, to save on transaction fees, he simply transferred Safaricom airtime to the conductor for free, instead of using M-Pesa. 

His worst experience? “There was one time I was escorted out - that’s a nice way of putting it- of a very prestigious restaurant,” because they didn’t accept M-Pesa.

Yet overall, he says, “It was surprisingly easy to live on MPesa for 60 days.”

Building a Cashless Business

Dylan Higgins, CEO of Kopo Kopo, the mobile money startup Amrit was working with, says the experiment was a tremendous learning experience for Kenya’s mobile money ecosystem. His company is one of many now leveraging M-Pesa to build a business.

“We work with Safaricom, so this was an opportunity to provide research to the market on what it’s like to go cashless for 60 days. We learned a lot about why people accept mobile money, and why people don’t accept mobile money. He found what’s inhibiting the move towards a more cash-lite society, and what opportunities could make the move to a more cash-lite society easier.”

Mastercard is now doing its own cashless 30-day challenge in the US. “Amrit started a movement،” Dylan jokes. “They should do it for 60 days.”

M-Pesa still has its challenges- high and unclear tariffs when it comes to small payments, and Safaricom’s slow progress towards opening the platform up to developers. But now that the company has realized the value in opening up, innovation around M-Pesa is booming.

Here are a few interesting Nairobi-based startups that are using M-Pesa as a platform for innovation ideas and services; 

Kopo Kopo

Kopo Kopo, launched this year, creates a world-class platform to enable small and medium businesses to accept mobile payments and build relationships with their customers. It enables merchants to accept, analyze and act on mobile payment data and trends.


Using embedded Safaricom sim cards, M-KOPA Solar allows customers to pay daily installments of KES 40 via M-Pesa over a period of one year for use of a home solar kit.


Similar to PayPal, merchants and buyers register and maintain accounts with PesaPal. Account holders can then receive payments via PesaPal (merchants) or make payments via credit/debit cards, money transfer, M-Pesa money transfers, etc. Account holders can track transactions and manage their accounts through the PesaPal website

Pay is an innovative payments processing solution and payment gateway for Africa. iPay is an easy-to-use payments processing system that incorporates VISA, Mastercard, Kenswitch, M-PESA, Airtel Money, yuCash.


MPAYER is a mobile and web application that enables businesses to manage income and expense transactions of the business both Mobile Money (M-Pesa, Airtel Money) and also cash. It also helps businesses keep track of customers, distinguish their different payments and generate reports on a real time basis through a mobile phone/ computer.


MRent allows tenants and managers to quickly and efficiently manage their rent payment and collection needs online. Whether you are a resident, manager, or owner of a residential or commercial property, MRent's online services can help make your rent payment and collection process much easier and more convenient. 

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