Why Kenya Is 10 Years Ahead Of The United States and Apple On Mobile Payments

Apple’s product launches are covered with breathless enthusiasm usually reserved for royal weddings and vaccines for dread diseases. The recent launch of the iPhone 6 featured an exciting new technology—ApplePay—which, if widely adopted, will allow Apple’s discerning customers to make electronic payments from their phones in situations where they would have used credit cards or cash. In other words, if all goes well, Americans will soon be able to do something that Kenyans have done every day for ten years. M-PESA, the mobile payment system offered by Safaricom, is used by more than two thirds of adult Kenyans and is the model for hundreds of digital payment startups across Africa and around the globe.

The reason Kenya is ten years ahead of the US on mobile money is simple: Kenya needed phone-based payment systems more urgently than the US did. Credit card penetration was (and is) low in Kenya. Most Kenyans don’t have bank accounts, making paper checks largely useless for all but the largest transactions. M-PESA was an appealing alternative to the status quo for transferring money from city to city. Before you could transfer money via an SMS message, it was routine to give a stack of bills to a taxi driver heading to that town and ask him to deliver your payment for you.

In the US, on the other hand, we have a system of credit cards and checks that, despite fraud, inefficiencies and other flaws, works well enough to enable trillions of dollars in consumer spending. Our system, while imperfect, is good enough. And good enough is a problem. “Good enough” gets in the way of innovation. When a nation faces problems where there are no good solutions, it often responds with a wave of innovation and infrastructure-building...