M-Pesa was built for loan repayments — users turned it into mobile money

In October 2005, Vodafone and Safaricom launched a pilot of M-Pesa, funded by the UK's Department for International Development (DFID). The purpose was to allow microfinance borrowers to receive and repay loans using Safaricom's airtime reseller network. The goal was to make microfinance more efficient by reducing the cost of handling small cash transactions.

The pilot failed. Customers did not use the service for loan repayment. Instead, they discovered a more urgent need: sending money home to family in rural areas. In Kenya, few people had bank accounts, but most had mobile phones. Airtime had already been used as a proxy for money transfer, and M-Pesa formalized what people were already doing informally.

Vodafone and Safaricom pivoted the service. In March 2007, M-Pesa launched commercially as a money transfer and payment service. Users could deposit cash at a Safaricom agent, send it via SMS, and the recipient could withdraw it at another agent. No bank account required. The service grew explosively.

By 2011, M-Pesa had 17 million subscribers in Kenya alone. It moved KSh 15 billion per day by 2016. A 2016 study claimed it lifted 194,000 Kenyan households out of poverty. The service that was designed for loan repayment had become the world's most successful mobile money platform.