Which country pioneered paying by mobile phone?

Kenya, with M-Pesa from 2007 - pesa is Swahili for money. It was not designed as a banking product. The original pilot was for repaying microfinance loans, and the team noticed people were already using prepaid airtime as an informal currency, sending top-ups to relatives who would trade them for cash.

It worked because the alternative was so poor. Most Kenyans had no bank account and no realistic prospect of one, but did have a basic phone, and sending money home meant handing cash to a bus driver and hoping. M-Pesa needed no smartphone, no internet and no branch - just SMS and a network of small shops acting as cash-in and cash-out agents. Within a few years the majority of Kenyan adults were using it and a substantial share of national GDP was moving through it.

The lesson has been repeatedly misread as one about technology. It was mostly about regulation: the central bank allowed a telecoms company to hold customer funds, which most banking regulators would not have permitted, and countries with better-established banks were slower precisely because the incumbents had more to lose. Kenya leapfrogged not because it was advanced but because there was less in the way.