Beyond Send-and-Receive: How Embedded Finance Is Reshaping East African Fintech

For most of the last two decades, East African fintech has been focused on one challenge: moving money digitally without a bank branch involved.

Mobile money solved that problem. Across Kenya, Tanzania, Uganda, and Rwanda, digital payments are now part of everyday life, while governments have digitised everything from tax collection to public services through platforms like Kenya's eCitizen and Rwanda's Irembo.

The more interesting question today is what gets built on top of that infrastructure.

That is where embedded finance comes in, and why it may be one of the most important shifts happening in East African fintech right now, even though it receives far less attention than the original mobile money boom.

The Shift From Payments to Embedded Services

Embedded finance refers to financial services such as payments, credit, and insurance being delivered inside a product whose primary purpose has nothing to do with finance.

The distinction matters.

A standalone banking or wallet app asks users to come specifically because they want to perform a financial transaction. Embedded finance works differently. It meets users where they already are, inside a ride-hailing app, a device retailer, a farm-input platform, or an e-commerce marketplace, and introduces financial services within an activity they were already carrying out.

The practical effect is that the financial product fades into the background.

You're not applying for credit. You're buying a phone and paying for it over time. You're not taking out insurance. You're signing up for a service that happens to include it.

East Africa's Clearest Example

If you want to see embedded finance working at scale in this region, M-KOPA is the case to study.

The Nairobi-based company finances smartphones, and increasingly electric motorbikes, through small daily or weekly repayments made via mobile money. Customers do not need collateral, a guarantor, or proof of income. The device itself serves as security: fall behind on payments and it locks remotely; catch up and it unlocks.

The scale is no longer a pilot-stage story.

M-KOPA today:

• Nearly 10 million customers served across Africa

• More than $2 billion in credit disbursed

• KES 207 billion unlocked for customers in Kenya

• 4.8 million Kenyan customers reached

• Nearly four in ten customers received their first formal loan through the platform

• More than two-thirds received their first insurance cover through bundled products

This model works particularly well in East Africa because two conditions already exist. Formal credit remains limited, while mobile money is deeply embedded in everyday financial behaviour.

The World Bank estimates that only about a quarter of adults in low-income countries use formal credit at all. At the same time, mobile money usage is frequent enough that repayments can happen quietly in the background of a person's existing financial habits.

M-KOPA's own explanation is straightforward: each repayment becomes a data point, and enough data points become a credit history, built without a bank statement.

Where Else It's Showing Up

M-KOPA may be the most visible example, but the pattern is spreading across multiple sectors.

E-commerce and ride-hailing

Platforms are embedding wallets and buy-now-pay-later products directly into checkout experiences, allowing customers to finance purchases without leaving the app to engage with a separate lender.

Mobility fintech

Vehicle financing is increasingly being integrated into ride-hailing and delivery platforms, helping drivers access cars and motorbikes through the same applications that generate their income.

Agritech

Agricultural platforms are beginning to bundle insurance and credit into farm-input and market-access services, rather than requiring farmers to seek out separate financial providers.

Open banking

Much of this growth depends on the infrastructure beneath it.

Kenyan institutions including Equity Bank, KCB, and Co-operative Bank have expanded their API offerings, making embedded financial products easier to integrate and scale.

Kenya's central bank published a draft open banking framework in March 2024, with full compliance expected by the end of 2026. The framework formalises a level of bank-to-fintech data sharing that had, in practice, already been taking shape for years as mobile money normalised digital financial interactions across the country.

Why Investors Are Paying Attention

"Many investors are now seeing SME digitisation as the next major fintech opportunity in East Africa," says Joe Kiragu, Sybrin's Regional Director for East Africa.

"If you want to evaluate how an economy is growing, look at the SME sector and the middle class."

His observation helps explain why embedded finance, rather than another standalone payments app, is attracting increasing attention across the region.

Mobile money largely solved consumer payments. The remaining opportunities sit around the edges of that success: working capital for small businesses, asset financing for informal workers, insurance for first-time policyholders, and other financial services that remain inaccessible to large parts of the population.

The Rise of Alternative Data

Another factor making embedded finance possible is the way creditworthiness is being assessed.

Alternative data, including transaction histories, utility payments, and repayment behaviour, is increasingly standing in for the credit bureau records that much of the region's population simply does not have.

This is more than a technical adjustment.

It is the mechanism that allows financial products to be embedded into phone retailers, ride-hailing platforms, and other non-financial services. The platform itself becomes the source of the data used to make lending decisions.

Without that shift, many embedded finance models would struggle to function at scale.

Where the Model Still Faces Limits

The growth of embedded finance is not without challenges.

Interoperability remains a significant constraint. A financing or insurance product embedded within one platform does not necessarily move with a customer who switches to a competing service. Even when unintended, this can create forms of soft lock-in that limit consumer flexibility.

Regulation is also still catching up.

Kenya's open banking framework illustrates this dynamic. The country has spent years operating with varying degrees of data sharing between banks, telcos, and fintechs. Only now is a formal regulatory framework being developed to govern practices that have already become common in the market.

As Kiragu puts it, the region's payments layer is mature, but "the next level is moving from access to quality and embedded services."

That observation captures the current state of East African fintech well. Access is no longer the primary challenge. The focus is increasingly shifting toward the quality, depth, and usefulness of the services built on top of existing payment infrastructure.

Beyond Payments

It makes sense that embedded finance receives less attention than mobile money did.

There is no equivalent of a single breakthrough product in the way M-Pesa transformed digital payments. Instead, the shift is happening across dozens of platforms that are not primarily financial companies at all.

Yet that may be precisely why it matters.

Mobile money answered the question of whether East Africans could move money digitally. Embedded finance is beginning to answer a different question: who gets access to credit, insurance, and working capital, and under what conditions?

Increasingly, those decisions are not being made inside a bank branch. They are being made inside the apps people already use to work, shop, travel, and run their businesses.

The next phase of fintech growth in East Africa may not be defined by new payment rails, but by the financial services quietly built on top of the ones that already exist.

How M-Pesa Became the Backbone of Kenya’s Digital Economy

A single interaction in Nairobi can tell you everything you need to know about how money moves in Kenya.

A matatu conductor doesn’t ask if you have cash. He doesn’t even slow down the transaction. He simply says “M-Pesa,” types a number into his phone, and moves on to the next passenger while you finish calculating your fare. That small exchange carries shows what happens when a mobile money system stops being an option and becomes the default way people transact.

Nineteen years after its launch, M-Pesa has gone far beyond its original purpose of helping unbanked Kenyans send money. It now sits underneath a large share of daily economic activity in the country, shaping how people pay, save, borrow, and even prove their creditworthiness.

For anyone building fintech products in Africa, it also raises a useful question: what does real scale actually look like when a financial product becomes part of everyday life?

From a Simple Transfer Tool to National Financial Infrastructure

When Safaricom launched M-Pesa in 2007, the goal was narrow. Many Kenyans did not have bank accounts, but mobile phone usage was already widespread. The idea was to let people send money through basic phones using airtime-like transfers.

At the time, fewer than 30% of Kenyan adults had access to formal banking services. That gap between mobile penetration and financial access became the opening M-Pesa was built on.

The adoption that followed was gradual at first, then compounding.

By 2024, financial inclusion in Kenya had risen to 84.8%. M-Pesa now serves over 40 million monthly active users in Kenya and more than 70 million customers across markets including Tanzania, the Democratic Republic of Congo, Mozambique, Lesotho, Ghana, and Egypt.

The scale shows up most clearly in daily usage patterns:

• Around 2,600 transactions are processed every second in Kenya

• In the financial year ending March 2025, M-Pesa moved about Sh38.3 trillion in transaction value

• It now contributes roughly 41.5% of Safaricom’s total revenue

What started as a money transfer service has effectively become a core layer of economic infrastructure.

The System Behind the System

The agent network

The part of M-Pesa most people interact with is digital, accessed through the phone. The part that keeps it running is physical.

Across Kenya, there are about 298,900 M-Pesa agents. These agents sit in kiosks, shops, markets, and rural trading centers. They allow users to deposit and withdraw cash instantly, bridging the gap between digital balances and physical currency.

This structure matters because it solves a problem many digital-only fintechs struggle with: cash is still deeply embedded in everyday African commerce. Without a physical conversion layer, adoption would likely have been far more limited outside urban centres.

Merchants and Everyday Commerce

M-Pesa also became embedded in business transactions much earlier than many other mobile money systems.

Today, around 633,000 businesses accept payments through Lipa Na M-Pesa. Alongside them are hundreds of thousands of micro-merchants using Pochi La Biashara, including motorcycle taxi operators, food vendors, and small kiosks.

For many of these businesses, M-Pesa functions as:

• A payment system

• A record of daily sales

• A substitute for formal bookkeeping

Over time, that transaction history has taken on a second life. Lenders and fintech companies increasingly rely on it as a proxy for income verification and credit assessment. In many cases, consistent M-Pesa activity is more useful than traditional bank statements, especially for informal businesses that never had access to them in the first place.

How M-Pesa Expanded Beyond Payments

Once payments became routine, Safaricom began layering additional financial services on top of the same infrastructure.

The pattern is consistent: instead of building separate systems, new products plug directly into the M-Pesa wallet and its transaction history.

Ziidi and Retail Investing

One of the clearest examples is Ziidi, a money market fund integrated into M-Pesa and developed with partners including the Nairobi Securities Exchange and Kestrel Capital.

It lowered the entry barrier for investing dramatically, allowing users to start with as little as KES 100.

The growth has been striking:

• About 130,000 users in September 2024

• Around 4.3 million users by March 2026

To put that in context, traditional collective investment schemes in Kenya serve roughly 300,000 people in total. Ziidi alone has surpassed that entire base.

Credit Built on Transaction History

Credit has followed a similar path.

Products such as Fuliza Biashara and the Taasi loans (Taasi Till and Taasi Pochi) are designed for small merchants who already use M-Pesa daily but lack formal credit histories.

Instead of relying on collateral or traditional credit scores, lending decisions are increasingly influenced by:

• Transaction frequency

• Cash flow consistency

• Wallet activity patterns

This shift has quietly changed what “creditworthiness” looks like for a large segment of small businesses.

Cross-border and Global Payments

More recently, M-Pesa has begun extending beyond domestic transactions.

A virtual Visa card linked directly to the wallet now allows users to pay for global services such as Netflix, Amazon, and Apple. This removes the need for a separate bank-issued international card and brings global payments closer to the same interface people already use for local commerce.

Why This Matters Beyond Kenya

The trajectory M-Pesa has followed is increasingly relevant across Africa.

According to GSMA, the continent now has over 500 million active mobile money accounts processing more than $830 billion annually. At the same time, fintech revenue across Africa is projected by Boston Consulting Group to grow from around $10 billion today to over $65 billion by 2030.

But the growth opportunity is shifting.

Payments are already widely adopted. The larger gaps remain in:

• Access to credit (with over half of African adults still underserved)

• SME financing (with an estimated $330 billion funding gap)

• Savings and investment access for low-income users

This is where the next phase of mobile money expansion is heading: financial products built directly on top of payment systems that already reach mass adoption.

The Prevalent Gap

Even with its success, M-Pesa highlights some of the structural limits of Africa’s financial systems. The biggest challenge is interoperability.

A user in Kenya cannot seamlessly send money to a mobile money user in Tanzania, even though both operate within the East African Community. Different operators, regulations, and settlement systems still create fragmentation.

Regional efforts like the Pan-African Payment and Settlement System (PAPSS) and broader integration under the African Continental Free Trade Area are attempting to reduce this friction.

In many ways, the constraint is no longer technological. It is regulatory and institutional.

In SummarY

M-Pesa’s evolution offers a clear pattern: a system designed for basic money transfers can gradually become the backbone of an entire financial ecosystem when three things align: distribution, trust, and repetition.

What began as a way to move money without a bank account now sits at the centre of payments, lending, savings, and even cross-border commerce in Kenya.

The most interesting part is not the scale itself, but how it was achieved. There was no sudden leap. It was built through agent networks in kiosks, small transaction fees, and low entry thresholds that made participation effortless.

For the rest of Africa’s fintech ecosystem, M-Pesa serves as both reference point and warning. The next wave of growth is unlikely to come from payments alone, but from what gets built on top of them once they become invisible.