The PAYTECH Book

How Helping Microbusinesses Accept Digital Payments Could Transform Kenya’s Economy and Enhance Inclusion

By Peter Gakure Mwangi

Head of SME Finance, Kopo Kopo Inc.

The Frontier Beyond Person-to-Person Payments

The next big frontier for mobile payments in Africa will be for micro, small and medium enterprises (MSMEs) to accept mobile payments. Enabling such enterprises to receive payments digitally using mobile payments would be both a major revenue opportunity for FinTechs and a way to transform the economic wellbeing of thousands of small business owners in Kenya.

In the 6 year period between 2011 and 2017, there were 135 live money deployments with 338 million registered accounts and a combined transaction value of US$20 billion. However, only 3% of that value was in the form of merchant payments.¹

In Kenya, mobile payments have experienced rapid and widespread growth since the launch of the M-Pesa mobile money service, in 2007. By the end of 2018, Kenyans had cumulatively made about 9 billion transactions valued at US$220 billion. US$20 billion was transacted using M-Pesa in 2018 alone. Almost all of these transactions are in the form of person-to-person (P2P) transfers.²

But Kenyans Still Buy Most Things Using Cash

95% of Kenyan shoppers buy their goods and services from microbusinesses, especially dukas (small local shops), kiosks and pharmacies.³ And almost all of the payments received by these micro merchants are in cash. Payments to suppliers are also carried out ...