Kopokopo is a Kenyan merchant payments platform founded in 2012 that set out to solve a specific problem: enabling Kenya's vast informal retail sector - the dukas, mama mbigas, and market stalls that handle the majority of everyday commerce - to accept M-Pesa payments and access working capital. While companies like Pesapal and iPay Kenya focused on online payment aggregation for formal businesses, Kopokopo targeted the millions of small merchants for whom digital payments meant a till number and a handwritten ledger.
The company was backed by the Kopo Kopo Foundation and received early support from the Bill and Melinda Gates Foundation as part of broader efforts to digitise small business payments in emerging markets. The founding thesis was grounded in financial inclusion economics: if small merchants could accept mobile money, they would generate transaction data that could serve as a credit scoring proxy, enabling access to working capital loans. This "payments-to-lending" pipeline was the holy grail of emerging market fintech - turning transaction flow into a financial identity for businesses that had no formal credit history.
Kopokopo's platform allowed small merchants to register for M-Pesa's Lipa Na M-Pesa (Buy Goods) service, track transactions through a simple dashboard, and access cash advances based on their payment volume. A kiosk owner processing KSh 50,000 in monthly M-Pesa transactions could receive a cash advance of KSh 30,000 to 40,000, repaid automatically through a percentage of future transactions. This revenue-based financing model - similar to what Square Capital later popularised in the United States - was innovative in the Kenyan context, where bank loans to small businesses required collateral that most informal merchants did not have.
The company's growth was tied to Safaricom's own expansion of Lipa Na M-Pesa, which grew from a few thousand merchants at launch to over 300,000 active till numbers by 2020. As Safaricom pushed merchants to accept mobile payments, Kopokopo provided the analytics and credit layer on top. But this dependency on Safaricom's infrastructure was also a vulnerability - Safaricom could adjust merchant fees, change API terms, or introduce competing products at any time.
Kopokopo raised funding from impact investors and development finance institutions, reflecting its positioning at the intersection of fintech and financial inclusion. The company processed billions of shillings in merchant payments and disbursed thousands of merchant cash advances. However, the merchant payments space in Kenya became increasingly competitive, with Safaricom's own Fuliza overdraft product and M-Pesa's built-in business tools offering similar functionality without the need for a third-party platform.
Kopokopo's significance lies in its demonstration that mobile money transaction data could function as credit infrastructure - a concept that influenced the broader fintech ecosystem and informed how companies like Tala and Branch International thought about alternative credit scoring for consumers.
See Also
Sources
- Omidyar Network. "Kopokopo: Merchant Payments and Working Capital in Kenya." Case study, 2014.
- Waldron, Daniel and Hwang, Reena. "Merchant Payments as a Gateway to Financial Services in Kenya." CGAP Brief, 2015.
- Jackson, Tom. "How Kopokopo Is Bringing Digital Payments to Kenya's Informal Sector." Disrupt Africa, 2016.
- Bill and Melinda Gates Foundation. "Digital Financial Services: Kenya Merchant Payments Ecosystem." Report, 2017.